5. John Riccitiello
> Company: Electronic Arts Inc. (NASDAQ: EA)
> Share price YTD: -32%
Riccitiello joined EA as CEO in April of 2007. The game company’s fortunes have run very much downhill since then. EA shares are off more than 75% in the past five years. EA had a combined net loss of almost $2.5 billion over fiscal years 2008, 2009, 2010 and 2011. During the most recently reported quarter, revenue fell from $715 million to $711 million. EA’s net loss was $381 million compared to a loss of $340 million in the same quarter a year earlier. Wall St. was disappointed by the company’s financial outlook for the quarter going forward. The case against Riccitiello is easy to make. His ability to move more of the company’s revenue to new social media and mobile platforms has been poor. In July, 2011, EA bought PopCap Games for $650 million plus earn outs to move further into the social game and smartphone sectors. It bought Playfish in November 2009, paying as much as $400 million, to reach the Facebook online game sector. But EA continues to be flanked by companies such as Zynga Inc. (NASDAQ: ZNGA), and its revenue does not show that it has made much progress with its diversification efforts beyond legacy platforms like game consoles.
6. Rory Read
> Company: Advanced Micro Devices Inc. (NYSE: AMD)
> Share price YTD: -54%
Read joined the troubled chip company in April 2011. AMD shares have plunged 72% since then, and there is virtually no case to be made that his tenure has not done more to wreck the company that so badly needed to be turned around. At the end of the third quarter of 2012, AMD’s share of the microprocessor market worldwide was less than 17%. Intel Corp. (NASDAQ: INTC) had the balance of the market and was still gaining ground. Part of AMD’s demise is largely beyond its ability to control. The PC market, which is so important to its prospects, has been on the decline, with shipments falling 8% in the third quarter, according to industry research firm Gartner. The portion of AMD’s fortunes over which the company has some measure of control is diversification beyond PCs into the fast growing tablet and smartphone markets. These markets are currently dominated by Qualcomm Inc. (NASDAQ: QCOM) and Samsung. However, Intel has begun to gain sales with its Atom x86 chip. AMD, on the other hand, under Read, has made no strides in this important sector.
7. Andrew Mason
> Company: Groupon Inc. (NASDAQ: GRPN)
> Share price YTD: -78%
There have already been rumors that the Groupon board might replace Mason, who has been the CEO since he co-founded the company in November 2008. For now, Mason has dodged that bullet, but Groupon’s share price and operating results mean he remains under pressure. The CEO’s fate could be determined by one or two people. Eric P. Lefkofsky, Groupon’s co-founder and executive chairman, owns shares that represent 27.7% of the voting power of the board. Accel Partners and New Enterprise Associates also have a substantial number of voting shares. One of the criticisms of Mason is that he has allowed smaller companies, as well as larger ones such as Amazon.com Inc. (NASDAQ: AMZN) and Wal-Mart Stores Inc. (NYSE: WMT), to take market share from Groupon. In part because of Mason’s failures to defend the business from competition, Groupon’s financial results have been horrible, causing concerns it will not survive as an independent company. In the most recent quarter, revenue rose to $569 million from $430 million. That growth rate of 32% is below what would be expected of a dominant Web 2.0 company. Despite top line growth, Groupon lost $54 million in 2011. The revenue improvement for the latest quarter was a slowdown from the 52% rate for the first three-quarters of the year. Groupon’s appeal to customers is slowing down.
8. Aubrey McClendon
> Company: Chesapeake Energy Corp. (NYSE: CHK)
> Stock price YTD: -24%
It is nearly impossible to understand how Chesapeake CEO and co-founder Aubrey McClendon has kept his job. In April, an investigation found that he borrowed $1.1 billion against personal interests he had in oil and gas wells held by his firm. Most analysts viewed this as a conflict of interest. The Securities and Exchange Commission said it has started an “informal inquiry” into the matter shortly thereafter. In May, his board forced him out as chairman. In June, McClendon hired an ex-SEC lawyer to represent his interests. As if these were not enough to trigger his dismissal, revenue in the most recently reported quarter dropped to $3 billion from $4 billion in the same period a year ago. And Chesapeake suffered a loss of $2 billion, compared to a $922 million profit in the same quarter in 2011. Chesapeake’s board was shaken up in June as a new chairman and four new board members were added. McClendon has run out of time.
Douglas A. McIntyre