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Wednesday, September 13, 2006

Cramer Has His Way (DELL)(BMY)(HD)(BOL)(AVP)

Like a colossus walking the canyons of Wall St., Jim Cramer has had his way again. After calling for the head of the CEO of Bristol-Myers, the company sacked the man.

But, what about the other targets of Cramer’s wrath. They include the CEOs of Home Depot, Dell, Avon, Bausch & Lomb, and Marsh & McClennan, as my able stable-mate Jon Ogg has pointed out.

Since Cramer was right on Bristol-Myers, let’s handicap the rest. It will be sort of Cramer CEO dead pool.

It would be hard to imagine that Michael Dell would publicly support his CEO as passionately as he did yesterday at the company’s tech conference if he planned to fire him. Dell also supported Rollins in a Barron’s interview two weeks ago. Odds of short-term firing: 10%.

Bob Nardelli has taken Home Depots’s stock from $20 in early 2003 to its current $37. Granted, it is down from its 52.week high of $43.95, but most retail stocks have been hurt by high gas prices and lower home sales. Not all of that can be put at his feet. The company’s revenue has gone from $64.8 billion to $81.5 billion over the last three fiscal years. Nardelli is arrogant and not well like by shareholders, but the board has to appreciate his performance. Odds of short-term firing: 10%.

Marsh & McLennan may fall into a different category. As Barron’s pointed out in its online edition yesterday, investors are tired of waiting for good results. The current CEO came in two years ago during a scandal involving the commercial insurance and mutual fund arms of the company, but the stock is still down 8% this year. But boards are reluctant to replace big company CEOs who have been in the seat such a short time. Odds of short-term firing: 15%.

Avon has been a real dog the last two years. The stock hit $45 in April 2005, and now trades at under $30. The mean analyst target for the stock is only $32.50, based on analysts covered by Yahoo!Finance, so there is not much optimism about the company. In the last quarter, sales were only up 4% on a same-currency basis, and earnings fell 54%, so of it on restructuring. If the current quarter is not a significant improvement, the stock could get punished again. Odds of short-term firing: 30%.

Bausch & Lomb present the ugliest picture, certainly over the last few months. The stock dropped from over $80 late last year to $70 in February to just above $40 in May. It now changes hands just north of $50. The company’s contact lens solution has had to be pulled from the market due to medical problems with some users. The company has had to delay SEC filings. Liabilities surrounding the contact lens product could build up. There appears to have been fraud in financial reporting in some of the company’s overseas operations. The CEO may not be at fault in all this, but bringing someone new in may be a necessity. Odds of short-term firing: 40%.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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