Technology

Chris Liddell's Style May Presage Ascent to GM Helm


The engineer and former Microsoft CFO is tasked with resurrecting GM's finances. If he succeeds, he could become the troubled automaker's next CEO

By Dina Bass, Keith Naughton, and David Welch

(Bloomberg) — Chris Liddell's to-do list as General Motors Co.'s chief financial officer includes repaying $6.9 billion in government debt and leading an initial public offering. He also may end up running the biggest U.S. automaker.

"If he performs as advertised, he's probably got a terrific shot at becoming the CEO," said Joseph Phillippi, president of AutoTrends Consulting in Short Hills, New Jersey.

Liddell, a newcomer to the auto industry from Microsoft Corp. (MSFT), faces the challenge of resurrecting the finances of a company that lost $88 billion from 2004 until filing for bankruptcy reorganization on June 1. He will be tasked with taking public again the Detroit-based carmaker that is 61 percent owned by the U.S.

As CFO at Microsoft from 2005 to last month, Liddell oversaw the world's largest software company's first debt offering this year as well as its first job cuts in January. He reduced travel costs by limiting employees flying business class, and he brought in capital expenditures at 23 percent less than budget in the most recent fiscal year.

"Chris likes big, bold challenges," said Bill Koefoed, Microsoft's general manager of investor relations. "Chris isn't about riding the wave, he's about trying to catch the next wave."

He runs triathlons, has completed an Ironman and does yoga. A Ferrari driver, according to Koefoed, Liddell has an engineering degree from the University of Auckland and a Master's in philosophy from Oxford University.

Once a director of the New Zealand Rugby Union, Liddell, 51, brought a former captain of his homeland's All Blacks rugby team to speak to finance executives and workers, said Koefoed, who worked for Liddell since the end of 2008.

Before Microsoft

Before joining Microsoft in 2005, Liddell was finance chief at International Paper Co. (IP), the world's largest paper maker. He was previously CEO at Carter Holt Harvey Ltd., a forestry company in New Zealand, and worked as an investment banker at Credit Suisse First Boston. That link with the finance industry may help Liddell when he needs to take GM public, Phillippi said.

GM Chairman and CEO Ed Whitacre and the company's board liked Liddell's experience as finance chief at two large companies, one focused on industry and the other on consumers, according to a person familiar with the board's deliberations.

The directors also were attracted by his international background and his knowledge of GM's worldwide operations, said the person, who asked not to be identified because the discussions were confidential.

Board Impressed

GM's board and Whitacre started talking to Liddell in November, when the CFO search intensified. He met with several board members as GM pared down the list of candidates, the person said. Liddell wasn't hired as a CEO-in-waiting and the search for a leader will continue, the person said.

GM declined to comment beyond the company's statement yesterday, said Chris Preuss, a spokesman. He didn't respond to e-mails yesterday requesting interviews with Liddell and Whitacre, 68.

Microsoft added 16 cents to $30.52 yesterday in Nasdaq Stock Market trading. The shares have jumped 57 percent this year.

Hiring Liddell gives GM an opportunity to bring in "fresh blood without a whole lot of controversy," said Rebecca Lindland, an analyst at IHS Global Insight in Lexington, Massachusetts.

Liddell's background as an engineer and executive at an industrial company will bring a fresh perspective, said Maryann Keller, senior adviser with consulting firm Casesa Shapiro Group LLC in New York.

"It's a different mindset," Keller said. "He will understand about making things. He has the credentials to move the company in the right direction."

Market Share

Whitacre has said GM must break its reliance on profit-killing rebates to buy U.S. market share. The automaker's year-to-date U.S. share fell to 19.7 percent last month from 22 percent for the same period in 2008, even as incentives averaged $4,300 on each vehicle, according to researcher Edmunds.com. That's $1,000 more than at Chrysler Group LLC.

As finance chief at Memphis, Tennessee-based International Paper, Liddell was an architect of a plan to sell about a third of the company for $11 billion to focus on production of uncoated office paper and corrugated shipping containers, CEO John Faraci said.

"Chris was an advocate about not being incremental about what we were going to do," Faraci said yesterday in an interview. He has known Liddell since 1996, when he hired Liddell to be CFO of Carter Holt Harvey. "Chris is a play-to-win guy."

Outsider's Eye

Liddell was an outsider when he was hired by Microsoft, and he hired outsiders, too. In 2006, he recruited Frank Brod from Dow Chemical Co. to be chief accounting officer. What made that notable was Liddell's decision to hire from beyond the technology industry, said Bruce Jaffe, who served as a vice president.

"He is a very hard-charging guy who makes good decisions and is not afraid to change things and shake things up," Jaffe said. "He was very much a proponent of relooking at the entire capital structure and making the company more capital efficient—there were no sacred cows for him."

In May, Liddell oversaw Microsoft's $3.75 billion bond offering, after years of shareholder requests. Analysts and investors at the time credited him with helping executives such as CEO Steve Ballmer warm to the idea. The company earned the top AAA rating from Standard & Poor's.

'Articulate a Vision'

"The one thing he did was articulate a vision of where he wanted to go, and he was disciplined," said Brent Thill, an analyst who follows Microsoft at UBS AG in San Francisco. "He understands how the street works and the importance of being approachable."

At Microsoft, Liddell helped turn the company around when software sales plummeted in the recession. Now Koefoed, who spoke to Liddell about the GM position, says he views his new job as attacking "arguably one of the biggest challenges that exist in North America."

"This is a huge opportunity to—in Chris's words—reengineer the whole auto industry, make it successful and bring it back to life in North America," he said.


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