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Thursday, September 07, 2006

Home Depot And Dell: BusinessWeek States The Obvious

Stocks: (F)(VIA)(HD)(DELL)(TWX)

It is nice for BusinessWeek to come out with a list of "CEOs In The Hot Seat". I think that should be "on the hot seat", but that's fine.

The premise of the article is that with Bill Ford stepping down and the CEO of Viacom being sacked, someone has to be next.

The obvious problem with the analysis is that at Ford and Viacom board level decisions are controlled by a small number of people, no matter what their boards tell Wall St. Changing the guard only took one vote at Viacom. Sumber Redstone, enemy of Scientology.

High on the list were Dell and Home Depot. Time Warner also made it. Our coverage of that company is written at BloggingStocks (

In the case of Dell, the control of the company is probably still with Michael Dell, the founder and largest shareholder. Dell has given his man, Kevin Rollins, public support. Although Dell could throw Rollins out for a stock price $35.68 this year to $22.10, it would be blaming the chief executive for problems that are endemic to the PC industry. The company's growth has slowed down, but its is still a $60 billion company with huge operating income.

Over at Home Depot, the board may have the same problem with Robert Nardelli. He has angered shareholders who think his pay package is too high and that he is an arrogant toad. But, as BusinessWeek points out, the financial performance of the company has been excellent since he joined. The recent problems with revenue, due primarily to slow housing starts and energy prices cannot be laid solely at his feet. The company is facing an options probe and its stock has dropped from $43.95 to $34.17. It is, however, up 80% over the last three-and-a-half years.

The odds makers in Vegas are probably betting the the CEOs at Dell and Home Depot will stay around awhile. BusinessWeek should check the over/under.

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

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