Lenovo SEHK (HK 992), the Chinese computer manufacturer, is not immune from the weakening computer market.  For the first time in three years, Lenovo reported its first earnings losses.  The company also announced that its American CEO, William J. Amelio, resigned his position.  According to a story by Brain Kraemer of ChannelWeb,

In its third-quarter earnings call Thursday, Lenovo said its worldwide PC sales fell 5 percent year over year due to a continued decrease in the demand for high-end computing solutions. In China, specifically, which is Lenovo’s key market, PC sales dropped 7 percent. Lenovo’s consolidated sales for the third quarter fell 20 percent year over year to $3.59 billion.    

 Lenovo also reported a pretax loss of $90 million from continuing operations. The loss for shareholders in the third quarter totaled $97 million. 

… Lenovo last month initiated a massive worldwide restructuring program that the company hopes will help it save approximately $300 million in the next fiscal year.

As  John Paczkowski of the WSJ’s All Things Digital blog indicated Lenovo seems to have got in line behind Apple and Dell.  The company has brought back its former CEO and Chairman.  The company announced today,

(1) Mr. William J. Amelio resigned as an executive Director, the President and the Chief Executive Officer of the Company;  (2) Mr. Yang Yuanqing became the Chief Executive Officer of the Company and ceased to be an Executive Chairman of the Board but will continue to act as an executive Director of the Company;  (3) Mr. Rory Read was appointed as the President and the Chief Operating Officer of the Company; and  (4) Mr. Liu Chuanzhi was appointed as an Non-executive Chairman of the Board.     

Lenovo will need to really focus on its operation to effectively compete in the difficult computer marketplace.  The company has a number of very fine products and if managed properly, should be able to weather the current economic storms.  Expect the new team to focus even more on the Chinese and Asian marketplace.  Stay tuned.  For more:  Los Angeles Times   Austin Statesman  Physorg.com  BusinessWeek   Barron’s blog   ZDNet Australia   New York Times  FT.com  Bloomberg  

On the other side of our special focus this week, we spoke to analyst Heather Jones of BB & T Capital Markets about the packaged food space. Here’s her analysis of the last year in this space:

Ms. Jones: Overall, the year was challenging, with mixed results:

• The packaged food companies were challenged by surging commodity costs and, for most, pricing didn’t catch up with inflation until the back half of the year.
• Sales growth, however, for the packaged food companies we follow was relatively strong for the year.
• The fruit names benefited from excellent pricing and good demand, but costs, including fertilizer and fuel, were a significant challenge and much more volatile than prior years.
• For the protein names, it was honestly a very split year. For much of the year, you had very good export demand that helped support pricing, particularly for pork, in the face of excess supply. However, in the back half of the year, export demand flagged and prices weakened considerably.

For the complete Food & Beverages issue, including a complete outlook for 2009 for both food and beverage companies, as well as stock picks, click here.

Jena McGregor wrote a clever piece today on BusinessWeeks’s Management IQ blog on the potential impact President Obama and Tim Geither’s announcement today on restricting executive pay of companies taking government TARP money. According to McGregor’s piece,

The new plan, it appears, would only apply to companies that come back for further funds, and it was not clear whether it would apply to all companies or those considered “exceptional.”  

… But what does this mean for companies far from the chasms of Wall Street or the snows of Detroit? It could have a big impact–at least over the long term. Perception is playing an escalating role in executive pay.  

 Check out the blog, it’s a worthwhile quick read.

Yesterday Liberum released its latest management change numbers for January 2009. As was the case for the last number of months executive turnover has remained tepid when compared with general unemployment figures facing North American economies. Companies throughout North America are shedding employees at an alarming pace while top executives overall have so far managed to remain immune from the layoffs. January’s executive turnover totals dropped precipitously when compared with the same numbers in January 2008. According to Liberum,

CEO turnover declined 35%, CFO turnover declined 49%, all C-level (from board of director all the way down to VP level) turnover declined 47% and board of director changes declined 41%.     

Liberum continues to anticipate that executive turnover will begin to increase as we move through February and into the latter part of the Winter and early Spring.  Below are two charts that breakdown January’s CEO and CFO turnover totals by company market caps at the time of each announced executive change.         

Our special focus this week is on Food & Beverages. In this issue, we spoke with analyst David Silver of Wall Street Strategies, Inc, who gave us his overview of where beverages are headed in this turbulent time:

Mr. Silver: I do think in North America, a portion of their business should continue to be stagnant. They are going to really see that the companies’ cost control strength and volume growth and their distribution channels are really going to be tested in North America because in order to continue to have the profit margins that they have had in the past, they are going to need to continue to grow volumes despite the slower economy and despite fuel prices….but then again, around the world I do think that we’re going to continue to see really strong growth, specifically in China, India and Russia and maybe a little more delayed in the Middle East.

For the complete Food & Beverages report, including interviews with analysts covering a range of topics in this broad space, as well as interviews with CEOs from top companies, click here.

Daniel Mcginn wrote a terrific piece in Newsweek entitled, Managing Along the Cutting Edge.  Mcginn focuses on the need for different skills for CEOs and other executives to succeed during the current recessionary times.  I have already focused on other articles examining this issue (e.g., recent FT Report on Managing in a Downturn).  McGinn writes,

It’s not just a sense of humanity that determines how well managers lead during recession. In good times, the best CEOs tend to be what recruiter Steve Mader of Korn/Ferry International calls “strategic creators”—people who excel at sifting among new ideas and placing bets on the likeliest winners. Managing in a down economy, in contrast, is mostly about taking bets off the table, a process that requires fewer big thoughts and more painstaking attention to detail. Which CEOs are up to the task? Mader says bosses like John Thain, who was revealed to have spent $1.2 million remodeling his Merrill Lynch office last year, epitomize a chief who seems ill suited for hard times. Sonnenfeld points to Carly Fiorina, who took over HP during the Asian financial crisis and then “flailed around, swatting at strategically inconsistent, splashy options,” like its 2001 merger with Compaq, as a CEO not equipped to deal with a recession.  

If you are an executive manager or an investor considering a company pressured by the recession you should read the piece. 

Ken Lewis, Bank of America’s embattled CEO, is not out of the woods yet.  While Lewis managed the other day to get the support of the bank’s board, today’s New York Post in an article by James Doran stated,

A group of angry Bank of America shareholders plans to demand that Chairman and Chief Executive Officer Ken Lewis get the boot at the bank’s upcoming annual meeting.  

Whether the shareholder suit referred to in the NY Post story or other related outside pressures will ultimately result in Lewis’ head only time will tell.  At a minimum, expect far more turmoil as to Lewis’ tenure and management approach.  For more:  Clusterstock