As earnings for the final quarter and full year 2014 are released, a second season has also started. Underperforming CEOs at large companies have started to get pushed out by their boards. Among those who still have jobs, two leading candidates for departures are the chiefs of International Business Machines Corp. (NYSE: IBM) and Avon Products Inc. (NYSE: AVP).
Source: Wikimedia Commons (Asa Mathat / Fortune Live Media)
The most recent CEO departures at large companies came at Mattel Inc. (NYSE: MAT) and McDonald’s Corp. (NYSE: MCD). Weak results and poor turnarounds were the trigger. They are not the only famous companies with the same trouble.
Ginni Rometty of IBM has presided over a drop in the company’s revenue and stock price. Presumably, as one of the largest tech companies in a world in which the role of technology has grown, IBM should be in a prime position to take advantage of the movement. However, it has not. IBM’s stock and confidence about its future both dropped as the company announced revenue from continuing operations fell 12% to $24.1 billion last quarter. GAAP net income from continuing operations dropped 11% to $5.5 billion. IBM showed weakness across most of its operating units.
ALSO READ: The Bullish and Bearish Case for IBM in 2015
Rometty has characterized IBM as a turnaround in the making. However, she has held the CEO job since the start of 2012. The turnaround has been too long coming.
Another large company that its CEO has had ample time to fix is Avon. Sheri McCoy took over as chief executive in April 2012, when the Avon’s board finally admitted that the previous CEO, Andrea Jung, had badly damage the company. The turnaround McCoy promised has not materialized, or even begun. After a string of bad quarters, more are expected. Yahoo’s poll of analysts shows that earnings per share for the most recent quarter, which are expected to be announced on February 24, will fall from $0.34 a year ago to $0.25. Sales are expected to drop from $2.67 billion in the quarter a year ago to $2.36 billion.
ALSO READ: Is a Buyer Knocking on Avon’s Door?
IBM and Avon have given their CEOs long enough. Investors who have been impatient for extended periods often precede CEO replacements.
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