|
BUSINESSWEEK ONLINE: DAILY BRIEFING | |||||||||||
| |||||||||||
|
| |||||||||||
How Black & Decker Lost Its Handyman Joseph Galli was considered heir-apparent, but it looks like he lost a power struggle Apr. 22 should have been a banner day for Black & Decker Corp. (BDK) investors. The day before, after the market had closed, the company reported that its first-quarter earnings had blown away Wall Street expectations, hitting 44 cents per share -- 26% more than analysts had been projecting. A major restructuring in 1998, which included the sale of noncore businesses such as most of the small household-products unit, was finally paying off. So why did Black & Decker stock drop nearly 8% on Apr. 22? Investors were fixated on a different development: Joseph Galli, the 41-year-old head of the company's core $3 billion power-tool and accessories unit, was out, in what appears to have been a power struggle. The charismatic Galli was widely viewed as the heir apparent to Chief Executive Nolan D. Archibald. The news of Galli's exit left investors and analysts stunned. Says one Black & Decker employee: "No one could believe this happened." Says Salomon Smith Barney analyst David K. Dwyer, who cut his rating on Black & Decker from buy to outperform after the news: "I can't understand why the company couldn't come to a reconciliation to keep him." GAG ORDER? Sources close to the company say Galli wanted to move into the chief executive job sooner rather than later -- and did not want to wait 10 years until the 55-year-old Archibald reached retirement age. While Galli resigned, CEO Archibald told reporters after the Apr. 27 annual meeting that "I chose the timing." Tensions had been building for a while: One person close to the company says last year Galli had been told to cut down on his direct communications with Wall Street and let investor relations handle the job. In addition, one former Black & Decker manager says a 1996 Forbes story that focused on Galli's accomplishments -- while casting a harsh light on Archibald's management style -- didn't help their relationship. And Galli is certainly not the first senior executive to leave under Archibald's reign. "It happens over and over again," says one former executive. The company isn't saying much about the split. Archibald declined to comment. But in a statement, the tool manufacturer said Galli was interested in advancing his career to a higher level, and "we have agreed that it makes sense for him to pursue this goal outside of Black & Decker." Galli, reached by phone, declined to give details on the reason for his departure but said: "I feel fortunate to have worked with so many dedicated and talented people at Black & Decker, and I'm exhilarated at the prospects I'm evaluating for the future." Certainly, Galli's reputation had been growing on Wall Street. He joined Black & Decker after graduating in 1980 from the University of North Carolina at Chapel Hill, where he was captain of the wrestling team in his senior year. He made his name leading the launch of a new line of professional tools in 1992 under the DeWalt brand -- a product line that seven years later racked up sales of $1.2 billion. Among his innovations: sending out sales groups, dubbed "swarm teams," to construction sites to give contractors demonstrations with the new tools. "Joe had real passion and leadership," says Mark A. Kauffman, senior vice-president at Lowe's Co. (LOW), a big Black & Decker customer. "Clearly, it is a loss." Says another customer: "Joe is Black & Decker." CLEARANCE SALE. At the same time, reviews of CEO Archibald's performance haven't always been as glowing. For example, some analysts were critical of Archibald's 1989 acquisition of conglomerate Emhart Corp., contending he overpaid in the deal. When Archibald bought Emhart, he planned to sell some of its businesses. But a global recession scuttled such sales, and left the company saddled with a massive debt load throughout much of the early 1990s. It wasn't until last year that Black & Decker sold off the last of the unwanted Emhart businesses, keeping the plumbing and locks operations. Investors are, however, optimistic about Galli's replacement. Black & Decker hired 21-year General Electric Co. (GE) veteran Paul F. McBride to take his place, putting McBride in line to succeed Archibald. At GE, the 43-year-old McBride held a variety of sales, marketing, and management positions, most recently running the global silicone products business. Prudential Securities Inc. analyst Nicholas P. Heymann figures McBride's strong background in the Six Sigma program of manufacturing improvement at GE will help him drive a similar effort already under way at Black & Decker. Still, McBride will need time to get up to speed. "There is no way, in my mind, that someone coming in not knowing power tools will have the impact Joe would have had over the next few years," says Salomon Smith Barney's Dwyer. As for Galli, most observers figure it won't be long before he lands a new job. You can bet Wall Street will be watching very closely to see where Black & Decker's former heir turns up. By Amy Barrett in Philadelphia
EDITED BY DOUGLAS HARBRECHT
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
 | |
 | |
 Assistive Technology barker.online Byte of the Apple Eye on Japan Hers.online Inside Wall Street Not-So-Neutral Corner Online Asia Power Lunch Privacy Matters Sector Scope Sound Money Street Wise Washington Watch News Flash Archive | ||||||
