The waltz of American managers continues and with the two changes at the top yesterday the "quota" of 1,500 layoffs in one year is getting closer and closer (for Corporate America it would be an all-time record). The latest changes have hit the big pharmaceutical industry, Eli Lilly and the third largest telecommunications company in the country, Sprint Nextel. With the final result that if the pace of four "departures" a day was maintained in the first 11 months of the year, it is not certain that a marked acceleration will not be witnessed during the Christmas period.
Sprint's message is clear: stop the subscription hemorrhaging and gain ground against AT&T, after losing customers in four of the last five quarters. The first to pay the price was number one Gary Forsee, who will be replaced by Daniel Hesse, the former CEO of Embarq, a spin off of Sprint. The new CEO could now repeat the same strategy implemented to restore Embarq when he cut a thousand jobs and closed several call centers. However, something will have to be studied to deal with the first drop (since 2003) in annual sales and the cut in estimates for 2008. On his side, Hesse has the advantage of being well accepted by the group board: the new CEO, in fact, has over 25 years of experience in the telecommunications sector, but does not have a long militancy within the ranks of Sprint or among those of Nextel. The two companies merged in 2005, but never fully integrated to the point of keeping the two headquarters separate: Nextel's infrastructure is poor for Sprint employees, while Nextel views Sprint as an over-bureaucratized bunch.
Less traumatic, however, the change at the top of Eli Lilly. The president and administrator of the giant, Sidney Taurel has announced that he will leave his position in 2008 and, starting from April 1, the current general and operational director John Lechleiter will be promoted to his place. Taurel, however, will keep the position of president of the group for the whole of 2008, when he will definitively leave the scene of the Indianapolis company where he entered as managing director in July 1998. «2008 is the right time to leave the company to a lot of good reasons – said the outgoing president -. The company has done very well in the last two years, exceeding forecasts. Furthermore, the management team has developed a vision that will guide the company for a long time and my successor has been preparing for this new role for many years». In short, Taurel wanted to remove the suspicion that his farewell was somehow linked to the statements made last week when the pharmaceutical group had announced several layoffs to deal with problems related to the expiration of patents on some drugs. A situation that effectively paves the way for competition from generic drug manufacturers.
Giuliano BalestreriIl Sole 24 Ore of 19/12/2007 FINANCE AND MARKETS p. 39
