Our special focus this week is on pharmaceuticals and as part of it, TWST has conducted an exclusive interview with Don Margolis of the Repair Stem Cell Institute. The Repair Stem Cell Institute is a public-service company that’s dedicated to educating the public about the nature of stem cell research, outside the media hype.

According to Margolis, in opposition to embryonic stem cells, who only know how to proliferate from an embryo into a zygote into a fetus, adult stem cells only know how to repair- thus making the term “repair stem cells”a more accurate name. When put into the body, the repair stem cells will go to the area of the body where they are most needed, and attempt to repair the damage as best as is possible. In terms of the succes of repair stem cells, Margolis says:

“Again, saying “successfully treat” doesn’t mean a full cure. It means repairing and regenerating tissue and the necessary functions that are performed by these cells. It means reducing symptoms, slowing down the progression of the disease and improving the patient’s quality of life.”

For the full interview with Mr. Margolis, and more information about repair stem cells, and their treatment by the media, click here.

Another financial CEO bites the dust. Kerry Killinger, the CEO of troubled Washington Mutual WM (NYSE) was finally forced out of his job. After failing to stem 

 continuing losses from home mortgages the bank’s board had to act. According to a story by Dan Fitzgerald and Peter Lattman of the Wall Street Journal,

For months, Mr. Killinger had fought off a growing chorus of calls for his removal. Even after Citigroup Inc., Merrill Lynch & Co. and Wachovia Corp. pushed out their chiefs over mortgage-related write-downs, and Mr. Killinger disclosed losses at WaMu of as much as $19 billion, the company’s board, dominated by associates and longtime allies, continued to back him. The board recently got new blood in key posts and concluded WaMu needed an outsider to signal a fresh start, according to people familiar with the matter. Board leaders conducted a discreet search for Mr. Killinger’s replacement and told the CEO Thursday that they wanted him to retire, these people said.

The bank selected Alan Fishman as Killinger’s replacement. Prior to the appointment Fishmanwas the chairman of commercial mortgage broker of Meridian Capital Group. In the past he was the president and chief 

operating officer of Sovereign Bank and earlier had been a top executive with Chase Manhattan Bank and earlier on Chemical Bank. While the market initially cheered the change, the bank is far from out the woods. WAMU also announced in its press release it had,

entered into a Memorandum of Understanding (MOU) with the Office of Thrift Supervision (OTS) concerning aspects of the bank’s operations, principally in several areas of its risk management and compliance functions, including its Bank Secrecy Act compliance program. In addition, WaMu has committed to provide the OTS an updated, multi-year business plan and forecast for its earnings, asset quality, capital and business segment performance. The business plan will not require the company to raise capital, increase liquidity or make changes to the products and services it provides to customers.

Fishman has a difficult job ahead of him. Keep a close eye on his appointments and his plans. Will he move for a takeover or what?For more:CNNBloombergPortfolioCNNReutersMarketWatchSouth Florida Business JournalDividend.comBarron’s blog

Unilever UN (NYSE) the Anglo-Dutch consumer products giant went to the outside again to bring some new energy to its operations and firm up its stock.  Under the tutelage of the company’s Swedish chairman, Michael Treschow, Unilver selected Paul Polman to replace outgoing CEO, Patrick Cescau who is retiring at the end of the year.  Polman is the first CEO Unilever has hired from outside in its seventy eight year history.  Polman has been Nestle SA’s head of North and South American Operations.While the company may have had a number of qualified internal candidates to take the CEO position, the board, and likely Treschow, understood the need for a take chargeexecutive who could shake things up a bit.  Choice of an outsider makes the task more likely.  Polman, a well-known consumer products executive who has worked for Unilever’s dreaded key competitors, Proctor and Gamble and Nestles’,  comes to the company with many of the skills the firm needs at this particular time.  At one time, according to Aude Lagorce of MarketWatch,

Polman, 52, had previously been tipped to succeed Peter Brabeck-Letmathe at the head of Nestle, but found himself in a delicate position after the group picked former head of the Americas Paul Bulcke instead last September. Before joining Nestle as chief financial officer in 2006, Polman had spent 26 years at Unilever archrival Procter & Gamble. 

Polman’s selection has overall been hailed by the investment community.    According to a Reuters story in Forbes,

“Paul Polman is probably the best candidate in the world to become CEO of Unilever. With hindsight, he was probably the only logical choice,” said independent analyst James Amoroso.”I think they’ve made an excellent appointment … They’ve really scored a home run here,” said Martin Deboo of Investec…. Analyst Virginia Heeribout at Natixis Securities said, “Mr Polman has a reputation as having a highly positive influence on Nestle’s stance towards investors.”… “Investors will warm to this decision as Polman’s shareholder friendliness has been proven during his short term as CFO of Nestle. He is also an extremely open, honest and likeable personality,” said Amoroso. 

According to a piece by Vidya Ram of Forbes Marketscan,

“It’s very positive that they have appointed another external person. The company has been lagging in performance over the past few years and needs someone who will be more aggressive than the insiders at Unilever,” said Keijser Capital analyst Nico Van Geest. Last year Unilever appointed Jim Lawrence, former vice chairman at General Mills, as its chief financial officer, and Michael Treschow of home appliance maker Electrolux, as its chairman. Geest said that investors were hoping that Polman, 52, would oversee a large share buyback program, having launched a $21.0 billion share buyback at Nestle last year. Unilever has already been implementing a number of changes including cost cutting, but there is need for more change, said Geest. These include being more aggressive in pricing, gaining more market share in emerging markets and in the United States, where Proctor & Gamble currently dominates. 

According to a story by Celeste Perri and Jeroen Molenaar ofBloomberg,

“I’m glad Polman’s coming,” said Felix Lanters, who helps manage about 12.5 billion euros ($18.1 billion) including Unilever shares at Amsterdam-based Theodoor Gilissen Bankiers NV. “Unilever’s stock hasn’t been doing too well lately. This could be a kickstart.” 

All indications excluding the comments from analysts and the company’s own spin on its decision to choose Polman appear to be in the right direction.  As the laggard of the big three consumer products manufacturers, Unilever needs a more aggressive management and a better understanding of the fundamentals.  Polman with the help of the chairman and others on the management team can make a difference at the firm.Stay tuned.For more:BloombergCNNWall Street JournalTelegraph UKTimes Online

Our special focus this week at TWST on the broad space of Business Services. We spoke to several analysts on our roundtable panel this week, who talked a little bit about their picks in this space:

• Andrew Jeffrey, Suntrust Robinson Humphrey- “MasterCard (MA) and Visa (VIS) have pulled in hard after second quarter results, which ironically were much better than Street expectations, largely for fear of multiple contraction and a slowing global economy. I think if you look back in 12 or 18 months, it will have presented itself as a tremendous opportunity in those names.”

• David Konig, Robert W. Baird- “Net 1 Ueps (UEPS) is a South African welfare distribution payment company…trading at 12 times r so calendar 2009 free cash flow despite very strong 20% or more EPS growth.”

• Thomas McCrohan, Janney Montgomery Scott- “Heartland Payments (HPY)…They’ve successfully built scale and currently process credit and debit card transactions for about 150,000 small to mid-sized merchants; they now have scale to take on larger merchants which is an underappreciated aspect of this story.”

For the full roundtable, including an overview of the current state of Business Services, and trends to come, click here.

Back in July, VMware VMW (NYSE) forced its CEO Diane Greene out and replaced her with Paul Moritz a former key executive at Microsoft.  Now comes word that VMware has lost its research head.  Richard Sarwal, VMware’s executive vice president of research and development according to Kris Kanaracus of ComputerWorld,

…has quit the company and taken a job at Oracle.  

Richard Sarwal, a longtime Oracle verteran, did not stay at the VMware long, he joined the company back in December 2007.

 Prior to joining VMware in 2007, Sarwal was Oracle’s senior vice president of systems management.  Oracle has not yet announced what position Sarwal will have at the firm.  In his place at VMware, the company has temporarily appointed Stephen Herrod, the senior vice president of research and development to take over Sarwal’s duties.  The unexpected change does not come at a great time for VMware as it moves to adjust to a new CEO and looks for new ways to compete with Microsoft and other competitors.Stay tuned

Alcatel-Lucent ALTU (NYSE) surprised many by going outside the world’s largest fixed-line telecommunications gear manufacturer to replace outgoing CEO (Patricia Russo) and chairman (Serge Tchuruk).  Last week rumors were rampant that the firm might make former COO, Mike Quigley, who at one time had been considered for the top position, as the new CEO (see earlier blog).  Instead the company made two very exciting picks.  The board picked former British Telecom CEO (2002 to June 2008) and Dutch national Ben Verwaayen.  For non-executive chairman the board chose former European Aeronautic, Defence and Space Company (EADS) co-CEO Philippe Camus.  Camus held the EADS job from 2002 – 2005.  He is also a co-managing partner of Lagardere since 1988, and since 2006 has been a partner at Evercore Partners, Inc.  According to a story by Rudy Ruitenberg for Bloomberg, 

(Verwaayen) boosted sales of business services to 7.9 billion pounds from 4.5 billion in six years as revenue from retail and wholesale services plunged.  Under Verwaayen, BT’s sales outside the U.K. grew to 17 percent of the total from 8 percent in fiscal 2002…. Verwaayen has the advantage that he has been the CEO of a network operator, so he knows what Alcatel-Lucnet’s customers want,” said Exane BNP’s Peterc.  

Camus when he was with EADS managed to bring a number of different cultures together to make the high tech operation succeed.  He may be just the right person to do the same of teh Alcatel-Lucent merger that has been faced with some of the same problems that EADS faced in relation to different corporate and personal cultures in one organization.  According to Peggy Hollinger who wrote a piece for theFinancial Times,

Mr. Camus may well be placed to help reconcile the cultural differences.  As EADS co-chief executive he had to navigate often difficult relations between the French and German shareholders, which exploded into acrimony after his departure. 

The new duo are already working on ways to fix the troubled telecom manufacturer.  According to Jennifer L. Schenker of Business Week wrote in a blog today,

During our discussion, Verwaayen mentioned a five-point plan he has already worked up to fix Alcatel-Lucent.  Among the key ideas: greater embrace of so-called “open innovation,” an emerging management concept also practiced by companies such as Philips, that aim to do away with the most “not-invented-here” syndrome in corporate R&D.  Instead, companies partner–sometimes even with their rivals–on development of key technologies, and look to startups that may have fresher ideas than the stuff coming out of in-house research labs.

… Healing the company’s wounds will take time, but Verwaayen has a long track record of winning over employees and creating a sense of common purpose. 

While the task ahed for these two top executives is fraught with problems, the choice to pick them was terrific.  Stay tuned for an interesting ride.For more:Barron’s Tech Trader BlogAssociated PressGuardianSilicon.comTelecom UKReuters