Harris Research Interactive, Inc.  HPOL (NASDAQ), the struggling custom research firm, has changed its CEO. Gregory T Novak who has served as the company’s president since 2004 and CEO since September 2005 resigned his position, effective immediately.  He has also resigned his position as Chairman.  In his place the board has selected Kimberly Till.  Till had been a CEO of a Harris Research competitor.  According to Market Research Online,

Till was CEO of TNS North America until leaving the firm in March, when it merged its North American and Latin American custom business. Prior to TNS, she was VP of the Worldwide Media and Entertainment Group at Microsoft, and served  

 as SVP and General Manager of AOL International. She also previously served as the SVP of Strategic Planning and Marketing for Sony Corporation of America, and as the Director of Marketing and Operations for Disney Interactive in Paris, France. Till has an MBA from Harvard Business School, a JD from Duke University Law School and a BA in History from the University of Alabama. 

Harris Interactive has been struggling of late.  The company has lost a fair amount of pharmaceutical related business. According to the Market Research Online article referred to earlier the company plans to lay off a number of domestic workers.  Till’s selection appears to be a good choice.  She has the requisite background in research and more significantly a far greater understanding of marketing than Novak.  Novak was an engineer by trade, Till has a more varied background which should serve her well in this difficult business environment.  While the research market will continue to present difficulties, Till’s appointment may be just the medicine to help the company find a new path to progress.  For more: MarketWatch  Rochester Democrat and Chronicle   

Several times a year, we here at TWST talk with Jonathan Raclin, the Principal at Barrington Research Associates. Mr. Raclin always has his keen eye on the market, and in the current market climate, his insights are especially valuable. We talked this week with Mr.  Raclin about the current state of the economy, and how- in his opinion- we got here in the first place:

Mr. Raclin: We have been living in what is essentially a Wizard of Oz kind of an environment. Governments have acted as if they are financial geniuses capable of withstanding all types of problems. They have turned out to be no more than the proverbial man hiding behind the curtain. The federal government is running gigantic deficits, the current numbers almost impossible to understand. Take next year, for example. Given the amount of money they are throwing around today to save the system which comes on top of a 40% increase in spending under Mr. Bush’s watch, the national debt is something in excess of $10 trillion. The same thing is occurring in many state governments that have figured out how to bond various operating activities. So the debt continues to build and the operative term seems to be, “If you don’t ask, then we won’t have to tell.”…The whole thing has been a fabrication, a sleight of hand, a “Three Card Monte.” The unwinding has had and is going to have severe economic and political repercussions.

For the full interview with Mr. Raclin, including a complete overview of the current financial crisis and its impact on the U.S. and Global economies, click here.

For our full investment strategies report, including interviews with Mr. Raclin and other portfolio managers, click here. 

Carl Icahn weighed in today on the on-going controversy of CEO compensation. Icahn wrote on his blog today,

We need better corporate governance in this country. We can’t afford the kind of mismanagement that got us into a financial crisis that nearly caused an economic collapse. 

Paulson’s plan is a baby step in reforming executive pay but I have a better idea: why don’t we give shareholders of any bank accepting a government bailout the immediate right to call a special shareholders meeting to elect new board members?

In my view, it was the boards of directors at institutions like Citigroup, Morgan Stanley and Merrill Lynch, Lehman Brothers, Bear Stearns, AIG and others that failed to stop management from pursuing risky strategies that crippled their firms.

Frequently controversial and often times self-serving, Icahn continues to press for major governance related changes at public companies. We will have to wait and see if he can have any kind of impact on the bailout as it relates to executive compensation.  Stay tuned.  

Lawyers hold sway for ousted financial CEOs.  According to a story by Del Jones in USA Today,

Apologies, encouraged in recent years by the crisis-management industry, have dried up — even apologies deployed as a business or political strategy.

Legal concerns weigh heavily on any words that might be construed as an admission of guilt. But also weighing heavily is the silence from politicians, regulators and past and present CEOs at Fannie Mae, Freddie Mac, AIG, Bear Stearns, Countrywide Financial, Merrill Lynch and Washington Mutual. It’s been clear for weeks that the financial crisis has dammed the free flow of credit. But with each passing day, it’s also appears that the crisis has likewise dammed the free flow of taking responsibility.

 Public relations has lost out to legal culpability.  For more on the situation check out the article.  

SumTotal Systems, Inc. SUMT (NASDAQ), the software company that develops, markets, distributes and supports learning, performance and talent management products, has chosen an outside candidate, Arun Chandra, to replace Dan Fowler the current CEO.  Fowler, who is 70, has announced his retirement effective November 1.  Fowler will continue as a business advisor  to the company through his official termination on December 31.  He has been CEO of the firm since 2005.  According to the company’s press release,

Chandra is a veteran of Hewlett-Packard where he began his career as a software engineer. During his 20-year tenure at HP, Chandra held many leadership positions, his final as vice president of worldwide marketing, strategy & alliances for the Technology Solution Group, a $30 billion enterprise business. Earlier in his career with HP, he served as general manager of several growing businesses including the PC Direct business. He left HP in 2005 to serve as the president and chief executive officer of iPolicy Networks, a network security company.         

Most recently, Chandra served as vice president of corporate operations at Unisys where he led the company’s change management efforts. He also managed a broad range of corporate functions including the office of the CTO, corporate strategy & development, worldwide marketing and global alliances, among others. 

SumTotal has not been performing well from a shareholder perspective, yet the company’s overall financials have been reasonably solid.  While Chandra has a great deal of experience in the technology/software sector he has had limited experience as a CEO.   It is difficult to assess whether his long time experience at Hewlett Packard, recent stint at Unisys handling change management along with his short stint as CEO at iPolicy Networks are sufficient for assessing the potential he will have as SumTotal’s CEO.  It is hard to determine what he plans to do to help the company’s shareholder performance.  Keep a close eye on the company going forward.  Particularly any specific moves or new hires Chandra initiates.  For more:Mercury blogs Financial Week 

Our special focus this week at TWST is on Oilfield Services. Analyst Londgley Zephirin of The Zephirin Group talked to us a little bit about where the future of the oilfield services sector: for him, it’s deepwater drilling.

According to Mr. Zephirin, it’s technology that’s driving growth in this space. The company Transocean (RIG) has the youngest deepwater fleet, but one that carries the most advanced technology. Their technology allows ships in their fleet to be able to drill anywhere between 10,000 and 30,000 feet underwater, significantly deeper than ever before.

For the full interview with Mr. Zephirin, including a complete overview of the space at presents, as well as stock picks, click here.

Rachel Dornhelm of NPR’s Marketplace had an audio/written story on NPR’s Marketplace this morning that focused on how the recent bank bailout and the subsequent curbs on CEO pay could actually result in changes in the compensation structure for CEOs in numerous industries. There remains great skepticism over whether the new restrictions on CEO compensation imposed in the recent bailout package will actually have any impact even in the financial related sector. Dornhelm’s interview of Professor Charles Elson, the head of the University of Delaware’s Corporate Governance Program and Mark Borges, a compensation consultant with Compensia, raised the possiblility that the new restrictions may actually have an impact on CEOs outside the bailout. For more on the story check out the Marketplace piece.

As the financial crisis crossed borders executive compensation began to become an issue in Europe.  While the issue continues to frustrate many in the United States and was peripherally addressed in the recent bailout legislation, the Associated Press wrote a piece yesterday that appeared on MSNBC.  The story focused on how the executive issue is being dealt with in Europe.

Every week here at TWST, we speak to several portfolio managers who give us their professional advice on where to look in the market, and what they’re currently investing in.

This week we spoke to Stephen Lieber of Alpine Woods Capital Investors, who had this advice to give to investors in the current turbulent market climate:

“Mr. Lieber: The best advice I can think of at the moment is to take a longer-term perspective, but a very sober and careful appraisal of current risks. It’s not very original advice, but I think that one has to not be dissuaded from investing by near-term adversities, but rather to try to seek alternatives within the investing environment away from those adversities, things that will benefit from still visible dynamics. There is a great deal of strength in our economic structure and one ought to be able to find a way to participate in it even at a difficult time.”

For the full interview with Mr. Lieber, including a complete overview of his investment philosophy and stock picks, click here.  

Our top picks this week come from our second special focus on Steel Producers. Mark Parr, analyst with KeyBanc Capital Markets told a little about where he’s directing investors to look in the Steel Producers space:

TWST: What names should investors look at?

Mr. Parr: Near term, given the divergence between selling prices and scrap costs, we would focus a little more aggressively on the electric arc furnace steel producers like Steel Dynamics (STLD) and Nucor (NUE). I think GrafTech (GTI) is another great small cap name. They are a material supplier in the steel industry, but it’s a great fundamental story and the stock has really gotten caught up in this commodity downturn. Cleveland-Cliffs (CLF) is another story that I think has really gotten caught up in the commodity downturn and has got a very bright future with some tremendous fundamental value that’s not being realized in the market. Those are the four names I’d probably focus on right now.

For the full interview with Mr. Parr, including a complete overview of the Steel Production sector and an outlook for where its headed, click here.