Nine CEOs Who Will Go By The End Of The Year (CROX)(YHOO)(JAVA)(SIRI)(CBS)(VIA)(GM)(LEH)(Q)

Since 2006, 24/7 Wall St. has scrutinized public companies on a regular basis, focusing on those with poor management and has suggested which big company CEOs needed to be replaced. Hector Ruiz of AMD was on more than one of our lists. He stepped down last week. Charles Prince at Citigroup (NYSE:C) was on the 24/7 list of CEOs Who Have to Go list in 2006. So was Kevin Rollins of Dell (DELL). We have missed the boat on some of our calls. The chief at Kodak (EK) is still on the job. So is the head of Pfizer (PFE).

In 2008, 24/7 Wall St. has reviewed the performance of some companies which have been long-term disappointments and others that did poorly in the first half of the year. By thoroughly examining these firms we compiled a list of CEOs who are likely to leave between now and year-end. In most cases, shareholders would almost certainly benefit. In one or two cases, the bosses may simply leave out of frustration.

Crocs (CROX) This company was king of the specialty shoe business through much of 2006 and 2007. Revenue from 2005 to 2006 more than doubled and then more than doubled again in 2007. Crocs restated its first quarter earnings, but Wall St. did not seem to mind that as much as the results themselves. They were poor enough that JP Morgan cut back its earnings estimate for the company. Revenue for the period was fine, up almost 40% to $199 million. Crocs lost $6 million and both gross margins and core expenses both moved the wrong way. Guidance was for  Crocs to grow at about 15% in Q2 and for the full-year. Then CROX hit the market with a pre-announcment of Q2 numbers. It cut its revenue estimate for the quarter by over $25 million to $220 million. Its forecast for the balance of the year also moved down. Short interest in the stock is remarkably high and at the most recent measurement was 40% of the float.

Management at Crocs never took the company beyond its niche shoe business and investors have paid for that. The stock has a 52-week high of $75.21 and now trades at $4.96 after its earnings warning. Crocs, which had significant brand equity, was never able to build on this foundation to weather the stagnation of its original shoe business. CEO Ron Snyder needs to step down and be replaced with someone who has the kind of branding background that built Nike (KNE).

Yahoo! (YHOO) Just because Carl Icahn got three board seats does not mean Jerry Yang gets to keep his seat as CEO. He still has to shoulder the majority of the blame that took the company from a $33 cash offer from Microsoft (MFST) to no offer and a share price of $20.53. Selling off the company’s Asian assets, Yahoo! Japan and Alibaba, may bring in some cash for a special dividend, but that still leaves the company as a distant second in the search business. Almost every analyst covering Yahoo thinks its period of rapid growth is history.

The first director Icahn named when he made peace with the current Yahoo board was Jonathan Miller, former CEO of  Time Warner’s (TWX) AOL. If Yang does not get pushed out in a sale or reorganization of the company, he will probably get to see Miller move new furniture into his office.

Sun Microsystems (JAVA) can’t get off the schneid. Revenue at the company continues to be flat. Earnings hover around to zero. Sun recently pre-announced earnings.  Sun said it expects to report sales of $3.73 billion to $3.8 billion for its fiscal fourth quarter, which ended June 30, down from sales of $3.835 billion a year earlier. The firm expects net income of five to 15 cents a share, compared with nine cents a share in the year-earlier period.

Jonathan Schwartz took the CEO’s job from founder Scott McNealy in April 2006. Sun has moved from disaster to disaster since then. The company has not been able to successfully diversify beyond its server business even though it has made forays into the chip, operating systems, and open source software segments of the technology industry. Sun has made several acquisitions but none of them have helped the firm’s performance. Sun’s shares have dropped to $10.10 from a 52-week high of $25.04. Schwartz has to go. Bring back McNealy.

Sirius Satellite (SIRI) Mel Karmazin only had the No.2 spot at Viacom. After falling out with controlling shareholder Sumner Redstone, Karmazin decided to take his considerable skills as a media executive elsewhere. At the end of 2004, he took over as CEO of Sirius. He engineered a merger between his company and rival XM Satellite Radio (XMSR) well over a year ago, and that engagement is very close to making it through the FCC bureaucracy.

It must have dawned on Karmazin some time ago that, even after a merger, the chances that satellite radio will be a big money maker are exceedingly small. Everything from the Apple (AAPL) iPhone to cell phones and HD radio now compete in the mobile music and programming industry. Sirius and XM are no longer growing rapidly. They depend on new car sales for a large portion of the customer acquisition. Each company has over $1 billion in debt and negative operating income. This is not a good environment for refinancing junk debt. Karmazin may stay to see the deal approved, but there is no reason for him to stay beyond that. His creation has collapsed before it could be finished. This is a job for a restructuring expert.

Sumner Redstone, who works on a cicada-like cycle, fires his CEOs and, once he has made his way through that elite group, moves on to disowning his children.  He recently showed his daughter the door. That circle was competed, so it is time for the controlling shareholder and chairman of CBS (CBS) to begin anew. Redstone probably watches the share price of the company by the minute. It does represent a great deal of his net worth. CBS shares are off 50% over the last year. Peer firm Disney (DIS) is down 8% and Time Warner (TWX) is off about 30%.

CBS CEO Les Moonves, who is probably best known for firing disc jockey Don Imus, has delivered shareholders next to nothing over the last year. His towering accomplishment was to buy also-ran tech website CNET for a 45% premium to its share price. CBS is down about 25% since that announcement. The AP says Moonves made $68 million last year. Redstone may wonder if the CNET deal is all he got for his money. If CBS was in first place among the networks, things might be OK. But, it isn’t.

CBS has a twin in Viacom (VIA), the other large media company controlled by Redstone. Speculation is that Viacom CEO Philippe Dauman is safe because he and Redstone are close. If Viacom’s shares keep falling that may not mean much. Wall St. could argue that because CBS is a lost cause for the next year or two, Dauman is under more pressure to deliver for Redstone’s empire. With Viacom trading at $30.01, near a 52-week low, that is not likely to happen. Viacom is made up of two big pieces. One is its film entertainment group, primarily Paramount, the other is its networks operation, mostly MTV, Nickelodeon, and Comedy Central. Paramount, like most studios, has significant revenue and earnings fluctuations. In the last quarter, the division lost $63 million on a modest increase in revenue. The larger operation is their “networks”, and the money-makers of this part of the business are MTV, Nickelodeon, and Comedy Central. These are the most likely divisions to give it some degree of success on the internet. Each one is aimed at an age group which is already “internet friendly”.

The big internet revenue flow has not really kicked in yet. So far this year, Viacom is down 32%.

GM (GM) GM has already said it will abandon its profitability forecasts. Auto sales are falling too fast. At GM that means 20% most months compared to the periods a year ago. Rick Wagoner is the last of the Big Three CEOs still standing. Chrysler was sold off. Ford (F) chief Bill Ford brought in an outside after his shareholders had had enough.

Wagoner has been a whiz at cutting costs, perhaps as good as anyone in the history of the car industry. But, he was awful at predicting the future. A trip or two to Tokyo would have shown him that the competition may have moved into the SUV and pick-up businesses, but they continued to build small fuel-efficient cars. Perhaps the management at Toyota, Honda, and Nissan knew that the lessons of the Arab Oil Embargo had to be remembered. Wagoner can’t last if GM has another two or three months of incredibly poor sales and falling market share. GM’s shares are already down from a 52-week high of $43.20 to $12.85.  When the company raises money, it may well go lower. Fred Henderson was recently moved up to president. He is likely to take that last step up this fall.

Lehman Brothers (LEH) Almost everyone who could take the fall for problems at Lehman Brothers has done so. That leaves long-time CEO Richard Fuld. He could exit in one of two ways. Lehman could be taken over, or, the company’s performance might simply pressure the board to make a change. No one would be surprised if the next quarter was particularly awful. Shares in the investment firm are down from a 52-week high of $70.88 to $18.52.

If regulators had not moved to cut certain kinds of short selling in shares of Lehman and several other financial companies, its stock could be lower. Moody’s recently cut Lehman’s long-term senior debt rating from to "A2" from "A1." Not many investors are looking for a quick recovery at Lehman. If the company’s next quarter is anything like its last one, short sellers won’t be to blame. The board won’t have much choice other than to find a replacement for Fuld. Or, perhaps sell the company.

 
Qwest (Q) The big landline phone company could lose its CEO for one of two reasons. The first would be a buy-out. Qwest, without substantial cellular or high-speed broadband operations of its own, lacks the resources to move into the businesses that drive the growth at AT&T (T) and Verizon (VZ). It may have become a fairly attractive takeover target with its stock at $3.62, down from a 52-week high of $9.58. An acquisition offer from one of the larger US telecom companies or a large firm from overseas would move CEO Ed Mueller out of his job.

No one is going to take Qwest’s landline business and turn it into a growth operation again. But, the company’s board may need to go outside the firm to find a CEO the way that Sprint (S) did less than a year ago. Mueller seems to be in a very tough spot. His major problem is that he is not doing anything to overhaul. But, that is fault enough.

Douglas A. McIntyre