investors

Note: I wrote this on Thursday before Microsoft's latest bid for Yahoo; it's a follow-up to a post I wrote six months ago. I have two comments on Microsoft's offer: 1) It's aggressive and it's a sweetheart deal for Yahoo's shareholders; I think Yahoo's board will accept it; and 2) nevertheless, the issues I present are the same; it just becomes Microsoft's problem.

It's been seven months or so since Yahoo chief and co-founder Jerry Yang replaced Terry Semel at the helm of the ailing internet giant. At the time, I pondered the obvious question: Can Yang fix Yahoo?

For the record, I thought the board acted rashly in appointing Yang--a relatively inexperienced executive--to perform what would clearly be a challenging turnaround. I didn't think he had the experience to pull it off.

At the time, I thought that Yang--a visionary--wasn't what Yahoo needed. I thought Yahoo's problem was largely failed execution and missed opportunities in search advertising that allowed Google to leapfrog its more mature rival.

At this point, I'm even more convinced that Yang was the wrong choice. But I think the problem is bigger than missed opportunity and failed execution. The company does indeed need a new vision. And it needs a CEO who's capable of articulating and selling that vision down through the ranks and ensuring everybody's goals are aligned.

That's a tall order, but it can be done. Lou Gerstner did it at IBM, and that was no walk in the park. But Jerry Yang is no Lou Gerstner.… Read more

On March 21, 1983, AMD went public. Adjusted for splits, the stock closed at $9.00 that day. Today, shares of AMD closed at $7.95. That means if you invested $10,000.00 in AMD's IPO, today you'd have $8,833.33. Adjusted for 25 years of inflation, that would be about a buck and a half.

Just to calibrate that, the same investment in Intel would have gotten you about a half a million dollars, Texas Instruments about $150,000, both the NASDAQ and S&P 500 about $100,000; even National Semiconductor and LSI beat AMD, although not by much.

Of course, some investors have figured out that you can make a fortune playing the AMD roller coaster. Except for the tech bubble and a brief spike two years ago, the stock has traded in a relatively narrow range. Seems like a nerve-wracking way to invest, but I know people who swear by it.… Read more

Mergers and acquisitions, M&A, business development, strategic development, corporate development, there are lots of names for the business of acquiring companies. They all sound important, even exciting. But whoever said, "may you live in exciting times," didn't necessarily mean that to be a prophecy of good things to come.

On the contrary, if you're like most investors, employees or executives, it's more of a curse. You see, in the corporate world, exciting usually means risky. And there's probably nothing riskier or more prone to failure than merging with another company.

I can … Read more

Sprint Nextel said Monday that CEO Gary Forsee has stepped down as chairman and chief executive officer effective immediately.

Forsee's departure comes as investors, upset over the company's poor performance, have put pressure on the board of directors to make a change at the top.

The company said Chief Financial Officer Paul Saleh will become acting CEO until the board is able to find a replacement for Forsee. And board member James Hance, Jr., will assume the role as a non-executive chairman of the board, the company said.

Board member Irvine Hockaday said the company is focusing its … Read more

It looks like Sprint Nextel's CEO Gary Forsee will soon get the boot, which could spell trouble for the company's WiMax network.

According to a story published by The Wall Street Journal late Thursday, the company's board of directors is fed up with Sprint's poor performance and they're laying the blame on Forsee and company.

The story didn't identify sources by name, but referred to "informed people" who said the board of directors had already launched a search for a new CEO in August. Several high-profile candidates have been approached for the … Read more

Activist investor Ralph Whitworth is continuing to put pressure on Sprint Nextel CEO Gary Forsee, according to the Wall Street Journal.

Whitworth, who owns about 2 percent of Sprint's outstanding stock, told the WSJ that he has lost confidence in Forsee. While he stopped short of asking for Forsee's resignation, he said he'd like to see the company's board of directors make some management changes to get the company back on track.

Whitworth is most concerned about Sprint's investment in WiMax, a wireless-broadband technology that would greatly increase data speeds. The company has committed itself … Read more

No man (or woman) is an island, but I think some CEOs behave as if they're God's gift to corporate America. And what do we do to discourage that perception? Not much, I'm afraid. You don't think they get way up on those pedestals all by themselves, do you?

Lest we forget, CEOs are hired by their boards to lead a staff of highly qualified individuals in managing an enterprise. Yes, they are ultimately responsible for corporate performance--for which they are typically well compensated--but by no means are they solely responsible.

In fact, most CEOs have little or no direct or line responsibility for operating or administrative functions; those are typically handled by other executive officers. Exceptions are either temporary or dysfunctional, in my opinion.

In any case, this post is not about culpability and I don't wish to confuse the issue with facts. Dysfunctional behavior runs rampant in the executive ranks. Rather than try to be a shrink, I thought I'd provide some much needed feedback and unsolicited, practical advice to help CEOs cope...also to help us cope with them.… Read more

CEO compensation. That's all you have to say to get some people jumping up and down, screaming, and sputtering like raving lunatics. Me, I'm not sure how I feel about executive pay. After all, I was an executive, even a CEO, however briefly. But don't hold that against me.

In any case, I'll try to come up with an objective position by the end of the post.

In the meantime, let's take a look at some CEOs of high-profile, publicly traded technology companies. To be sure, these folks have some things in common. They shoulder a great deal of responsibility and risk; they have really tough jobs; and like it or not, they make tons of dough.

Do shareholders always get their money's worth? Well, not exactly.

Let's start with Mark Hurd of Hewlett-Packard. In fiscal 2006, Mark's total compensation--including equity-based compensation--was at least $19 million. That's a lot of money, right? Let's reserve judgment for the moment.

HP's performance during that time frame was $92 billion in revenue, $6 billion in net income, and $2.18 earnings per share. The stock responded accordingly; shareholders were treated to a market cap gain of $28 billion. For every dollar earned, Hurd returned roughly $1,500 to shareholders. I'd say he earned his keep.… Read more

As reported, Dell recently concluded a year-long internal investigation into its accounting practices. As a result, the company will restate its financials for four fiscal years (2003 through 2006) plus the first quarter of fiscal 2007. The good news is that the cumulative decrease in net income will be between $50 and $150 million - peanuts compared with Dell's reported profit of $12 billion during the restatement period.

The bad news, however, is contained in a rather heavily wordsmithed paragraph of Dell's press release:

"The investigation identified evidence that certain adjustments appear to have been motivated by the objective of attaining financial targets. According to the investigation, these activities typically occurred at the close of a quarter. The investigation found evidence that, in that timeframe, account balances were reviewed, sometimes at the request or with the knowledge of senior executives, with the goal of seeking adjustments so that quarterly performance objectives could be met."

It appears that certain senior executives had a chronic case of end of quarter madness, a relatively common disease among executives of publicly traded companies.

Confirming what was evident from Dell's announcement, CFO Don Carty said in a conference call with investors, "We did find evidence of fraud." But neither Carty nor Michael Dell - who reclaimed the CEO role in January - would divulge the identities of the senior executives referenced in the company's release.… Read more