Pat,
Nice epitaph for Alan. He didn't write it, did he?
A couple observations:
1. RE Firing the CFO, the board, and any others within range.
This sounds an awful lot like CPQ's very unsuccessful approach to fixing its problems. If there are 30 means of improving corporate results, less than 3 of them will lead to firing staff. Using that as a first approach is one of the quickest ways to destroy morale, motivation and results within a company.
Alan, 2 conference calls ago, made a couple comments that raised this red flag re his management style. I didn't listen to the tape again but the paraphrase of his statement was along the lines of "If they don't fix it on schedule, I'll fire them".
Actually, I can't think of a better way to destroy motivation in a company than instituting a reign of this kind of terror.
2. The company has some fantastic technology --- the 50/320, DSL, LMDS --- and equally fantastic people --- in part (maybe large part) because of Alan's leadership.
Pardon me. Which of those products are a result of Alan's leadership? Which weren't already well underway before you'd even heard of Alan Lutz?
I'll grant that Alan had some major achievements that will continue to reap dividends for NN going forward. The attention to Sales / Marketing is just one example of such an achievement that probably wouldn't have been made anywhere near this quickly without him.
The IP thrust happened during his tenure; thus I have to believe he had some role in NN finally recognizing that it wasn't the rest of the world that was out of step in this particular marching band. Well done, Alan, if you did achieve this objective. That alone, is likely to contribute more to NN's prospects and success than any other technical initiative. Not because of the products themselves so much as the signal it sends to the buyers.
3. Live by the sword, die by the sword. Alan chose to fire / restructure to achieve results. He really shouldn't be surprised to see a similar fate when he didn't achieve the desired results. New CEOs aren't given forever. Usually less than 3 months to show positive signs; and less than 2 years to deliver. I don't know what the agreement was with Terry, but I doubt that the objectives were achieved.
4. A final observation requiring a massive intuitive leap.
At the last earnings conference call, Alan advised that the Sales Force would have their commissions from sales cut off 2 weeks prior to the end of the quarter. The objective was to get the orders in in time to deliver product prior to quarter end. I suspect that someone forgot to tell the customers that the rules of the game had changed.
Thus customers that had been trained to wait until the last week of the quarter in order to get the maximum discount were disappointed; and a couple very large orders in the US didn't close.
I know that when a vendor's salesperson told me that I had only until next Tuesday to get the great rate being offered to me, if next Tuesday didn't meet my schedule, my reaction would tend to be along the lines of "Oh yeah, we'll see about that."
I suspect that the sales force ran into a couple accounts that wouldn't move their order commitments up by a couple weeks, then got annoyed when the expected discounts didn't materialize.
I wasn't there. So this is all speculation on my part.
I do suspect that we're likely to see the US recover sharply because of this order delay. Pearce will look like a genius for a quarter or 2 at least. And yes, NN's stock price will probably recover somewhat.
And if some of the very positive initiatives that you've written about so frequently in the past actually happen, yes, NN will see new highs again.
But I'd also be equally happy to see the Street take the stock's price down to about $5 Cdn (i.e. in the order of 1/2 cash) so I can sign up for some of that free money. :-)
Sorry to hear that your timing wasn't impeccable this time. Usually, you've been able to trade out before the warning and get back in at much lower prices after.
It would seem that NN's volatility has served you very well.
FWIW,
Ian. |
