January 15, 2012 | In: General
Top 5 Worst CEOs of 2011
2011 has ended, and many companies that were good are now bad – really, really bad! Now we all know the main reason of why good companies go bad: incompetent management, and by management here I mean top level executives, as in CEOs. But who were the worst CEOs of 2011? Well, here they are:
Mike Lazaridis and Jim Balsillie: If there is a gold medal for the worst CEO, then this medal should go to these two people: Mike Lazaridis and Jim Balsillie. Although these two gentlemen are geniuses when it comes to technology, they have the mind of a 5 year old kid when it comes to corporate vision and management. RIM (Canadian Research In Motion) used to be the leader a couple of years ago in the smartphone area. Now I realize that this is now a very competitive market, but not to the point where a company loses at least 1% of its market share (and subsequently the stock losing 6-7% of its value) every month. Mike and Jim have went into great trouble to making the wrong decisions all the times. They have stopped listening to their customers, they have stopped listening to the market, and they have stopped listening to their investors. The only thing that Mike and Jim needed (I’m using the past tense because the redemption ship has already sailed – a few months ago) to do to keep the company on track was to change the design of their phones and enhance their OS to remain competitive in the market. Instead, they stuck with the original ugly design of the blackberry, and, instead of enhancing their OS, they made it worse. Not only that, the blackberry email service is set to become completely obsolete in a few months from now, and they’re not even noticing. A lot of blackberry users are users that don’t care about security, they just want a cheap and more convenient alternative to messaging, and now there are many, many apps out there on every platform (including the blackberry) to do so (WhatsApp and the likes). Oh, and in case you didn’t remember, the blackberry service went down a few months ago for a few days, and all what RIM had to offer its annoyed subscribers was credit to buy worthless applications. It was probably better if they didn’t offer anything.
For the above reasons and many, many others, I declare Mike Lazaridis and Jim Balsillie the worst CEOs of the year! If RIM has still any sanity left, it should make sure that both of these
Reed Hastings: In close second comes Reed Hastings, Netflix’s CEO. Reed apparently was treating his customers as both lab rats and cash cows. Here’s what he did: He increased the Netflix’s subscription rate for the first time. His customers were annoyed but digested the increase. He thought to himself: “Hmmmmm… These lab rats didn’t die from this, and as cash cows, we are milking them more than before, which is what we need to do in order to create a strong foothold overseas.” So he did it again, but to his surprise, the lab rats/cash cows revolted against him, and his company, by telling him “You know what, we just discovered that your service is something that we may want, but we do not really need. We’re unsubscribing”. Google, Apple, and other vultures closely watched the drama as it unfolded, and we’re all sure that they are preparing strategies to absorb the huge churn that Netflix is experiencing. NFLX reached a high of $304 in the summer of 2011 (just after the first increase), and then it fell to about $62, making this stock one of the most hated stocks. Right now NFLX is experiencing a January Effect, but wait a bit, it will continue its decline, and that’s because: 1) Hasting is still the CEO (I’m amazed that he wasn’t ousted yet), and 2) NFLX should be trading at no more than 10 x EPS, which is about $44.
Brian Moynihan: Brian Moynihan, CEO of Bank of America, is working very, very hard so that BAC can reach the official status of a penny stock (or maybe he’s just itching for a BAC reverse split). Brian has made sure to pass the bad news about BAC to the market gradually, in order not to “shock” the stock. But the stock did get shocked, and it went down from $15.25 to less than $5 in a year. It seems that every day we wake up and hear more bad news about Bank of America. Why can’t Brian be transparent about the status of his bank, for the sake of every investor that got burned by its stock? Brian should be ousted, but it seems that Bank of America’s top executives are in agreement with his performance: it’s either that the BAC board is full of executives who don’t really care about the future of the bank, or it might be that they are very scared from Brian. Have you not wondered how come no one has ever questioned his performance as a CEO? I did!
Antonio M. Pérez: As CEO of Kodak, Antonio Pérez did his best for Kodak to become obsolete in the market that it created over a hundred years ago: the mainstream camera market. Antonio apparently told his team to neglect this market and to focus on the more lucrative (add sarcasm here) market of printers, so that he can compete with HP. Now why did Antonio make this very illogical decision? Well, rumor says that the whole thing is a personal vendetta against HP. For those who don’t know, Antonio used to work with HP before working with Kodak, and as soon as he moved to Kodak, his main obsession was beating HP in the printer market, which is kind of a crazy obsession if you ask me: Kodak, at its best (under his leadership – which is not really saying much), was 50 times smaller than HP. I believe America and the rest of the world should thank Antonio for shattering a company that is more than a century old, and that everybody loved. EK is now a penny stock and Kodak is set to declare bankruptcy very soon. Thanks Antonio, you’re the best, no one would have done it better!
Steve Ballmer: Steve Ballmer took over Microsoft as CEO back in 2000 (the title was bestowed upon him by none other than Bill Gates). Let’s first take a look at MSFT before and after Ballmer took over:
As you can clearly see, the stock suddenly dropped shortly after he took over (which is to be fair is not related to him – it was the NASDAQ crash) – however, the stock remained almost flat with a slight downward trend ever since. The market is appreciating Microsoft at only 10 times its earnings, which shouldn’t be the case had the market trusted Ballmer as a good leader for one of the most important companies in the world. Ballmer has never pushed the company forward, and instead of focusing on growth, he was focusing on maintaining the current status quo and belittling heavy weight competitors such as Google and Apple. By the way, it is because of Ballmer that Google, and not Microsoft, is in control of the Internet today. Microsoft changed the world before (it’s a fact that nobody can deny) and it still has the potential to change it yet another time, but not under this leadership. Ballmer needs to be ousted by Microsoft’s board (by the way, 12 years is a long time for someone, anyone, to remain as a CEO for any company). I understand that there is now a lot of bureaucracy in Microsoft but if Microsoft doesn’t put its act together, then it may very well lose its dominance in the operating system market (we all know that the future is in the tablets, where Microsoft has little presence, and its only response to this is a shaky deal with Nokia). Oh, and by the way, Google and Apple are both fighting very hard to dethrone Microsoft.
Ballmer should just leave and Bill Gates should take over Microsoft again, for the sake of Microsoft.
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