Admin - Mahony Partners

May

2012

Herbalife: An Update

Crisis

Herbalife didn't get much of a bounce today, a day after investor David Einhorn raised questions about the company's accounting that sent the shares tumbling. After rising early in the day, the shares fell another 6 percent, even after the company provided additional information in response to Einhorn's questions. (My earlier post discussed the company's response strategy.) It looks like investors see too much risk and simply want... Read More

May

2012

What to Do When David Einhorn Strikes

Crisis

Herbalife shares are rebounding a little after a 22% drop yesterday, when questions from investor David Einhorn during the company's earnings call sent investors fleeing. Einhorn is known for spotting accounting problems at companies and backing up his skepticism by taking big short positions. His sharp questioning of Lehman Brothers highlighted issues that ultimately brought about the firm’s bankruptcy. Herbalife did a reasonably good job of responding to the issues Einhorn raised. First, it addressed them directly on the earnings call where Einhorn spoke. Later, the co... Read More

May

2012

Coke and Monster: What was That?

Crisis, Media

The Coca-Cola Company was compelled to release a short statement yesterday denying that it was “at this time, not in dicussionss” to acquire energy-drink maker Monster Beverage Corp. Monster shares spiked on a report in the Wall Street Journal that Coke was exploring a deal for the company, only to fall back once Coke issued its statement. It appears the WSJ wants to claim credit both for breaking the story about a possible deal an... Read More

Apr

2012

At Barclays, Inaction Speaks Louder than Words

Crisis, Financial Services

The Barclays annual shareholder meeting last week was a loud and lively affair, with howls of protest directed at CEO Bob Diamond and Chairman Marcus Agius over the bank’s pay practices. Here’s how it was reported by the New York Times: "The atmosphere at the meeting was hostile from the start, and the speeches were repeatedly interrupted by hecklers. Mr. Diamond was booed as soon as he stepped on the stage to take his seat, and when Mr. Agius said Barclays had “made progress” over the last two years in accepting that “remuneration levels ... Read More

Apr

2012

Chesapeake Shows Why Lawyers Shouldn’t be Communicators

Crisis

The board of Chesapeake Energy (NYSE: CHK) just released a statement in which it denied knowing of CEO Aubrey McClendon’s borrowings related to his stakes in the company’s wells, contradicting a statement made by the company’s general counsel earlier in the week: “Chesapeake also wishes to clarify a statement appearing in its April 18, 2012 press release captioned “Chesapeake Energy Corporation General Counsel Henry J. Hood Issues Statement.” The statement that “the Board of Directors is fully aware of the existence of Mr. McClendon’s financing transactions” was intended to convey the fact that the Board of Directors is generally aware that Mr. McClendon used interests acquired throu... Read More

Apr

2012

The Rise of the Undead: E.F. Hutton Returns

Advertising, Financial Services, Taking & Managing Risk

E.F. Hutton is set to return to the brokerage world, according to a report in The Wall Street Journal. Backed by former Hutton executives, the long-dormant name is being revived and the firm is set to launch later this year. E.F. Hutton’s return is a measure of how badly damaged major financial brands are in the aftermath of the financial crisis. Although Hutton was tarnished by a check-kiting scandal in the 1980s, the brand retains wide public recognition and favorability. Given the public’s dismal regard for financial firms today, it wouldn’t surprise me to see other dormant ... Read More

Apr

2012

Lines Drawn in Wal-Mart’s Mexico Scandal

Crisis, Media

The question for Wal-Mart is how long its public statement about bribery allegations in Mexico will stand as pressure mounts on the company from several fronts. A report surfaced today that the U.S. Justice Department has opened a criminal investigation into the matter - news that likely was responsible for a further 2% slide in Wal-Mart shares. Since Monday, the scandal has clipped the company’s market cap by about 7%, some $12 billion. Wal-Mart responded promptly to the bribery allegations in a Read More

Apr

2012

Launching Sony’s Turnaround

Media, Taking & Managing Risk

Kazuo Hirai just might have the toughest job in the corporate world. Named CEO of Sony in February, his task is to turn around the struggling electronics conglomerateafter years of strategic drift and financial losses. He’ll have to revive the brand, excite consumers with new products and revamp operations – all while competing with nimble global giants like Apple and Samsung. That’s a tall order. In a corporate turnaround, it’s vital that the CEO communicate clearly and with convict... Read More

Apr

2012

Things get messy at Best Buy

Crisis

Best Buy Co has accomplished something remarkable. In a few short hours, it took a fairly routine CEO resignation and turned it into a scandal. Early this morning, just after the opening of trading, Best Buy issued a brief statement saying CEO Brian Dunn resigned. It wasn’t a big surprise; after all, Dunn had been criticized for failing to address the company’s serious competitive challenges. The press release included nice words from Dunn, and from the interim CEO, Mike Mikan. So far, so good. But that apparently wasn’t the whole story. In the afternoon, a company spokesperson was forced to acknowledge – following an Read More

Apr

2012

What the Best Buy Announcement Doesn’t Say

Crisis, Taking & Managing Risk

The announcement by Best Buy Co. that its CEO Brian Dunn resigned is significant for what it doesn’t say. Although it was awkwardly announced just as the stock market was opening, the company’s news release was direct, brief and included positive comments from Dunn and interim CEO Mike Mikan. The statement was also quick to defuse any suggestion of a broader conflict or new problem that sparked Dunn’s exit. But the statement said nothing about the company’s future strategy, which suggests big changes could be in the offing. Best Buy’s business model has been under strain ... Read More