The Cobwebs in Sears' Corner Office
After more than a year of trying to fill the corner office at Sears, hedge fund financier Edward Lampert, chairman of the retailer, is all but asking for volunteers. "We encourage those who think they are up to the challenge to reach out to us," he wrote in his annual letter to shareholders on Feb. 26. Sears' board, he added, met with some "very talented" people but has yet to make an offer. It has been 13 months since Lampert jettisoned Aylwin Lewis as CEO of Sears Holdings (SHLD), the parent of Sears and Kmart. (W. Bruce Johnson, a Kmart veteran, is interim chief.)
Those in the know partly blame Lampert's reputation for micromanaging. Some also say Sears is in such bad shape that many retail veterans consider it beyond saving in the current financial climate. The CEO hunt is being run by Russell Reynolds Associates, which declined to comment, as did Lampert. Says Sears spokeswoman Kim Freely, "the search continues."
Among those rumored to have been approached are Allen Questrom, who turned around J.C. Penney (JCP) and is now a senior adviser at private equity firm Lee Equity Partners; Mickey Drexler, J. Crew (JCG) CEO; and Apple (AAPL) Senior Vice-President's Ron Johnson, a former Target executive who now runs Apple's 251 retail stores. All declined comment.
Former Sears executives say Lampert keeps too tight a rein on the retailer, which is based in Hoffman Estates, Ill., via teleconferences from his office in Greenwich, Conn. Another problem, say analysts: Over the past few years he slashed costs and bought back shares rather than investing in the stores. Meanwhile, Sears' stock has shed more than $25 billion in value since its April 2007 peak. On Feb. 5, S&P placed the company's BB- credit rating on watch. Combined same-store sales for Sears and Kmart were down 8% for the year ended Jan. 31, below rivals such as Kohl's (KSS). Morgan Stanley (MS) analyst Gregory Melich says he doubts "a retail guy" will wind up as CEO. Lampert's splitting Sears into five autonomous units last year makes the job more like running a holding company, he says. "It will not be the classic merchant who would want that role."
Biotech's Good News, Bad News
A milestone? More likely a blip. The biotech industry as a whole turned a profit in 2008 for the first time in its 40-year history, reports the latest survey by venture capital group Burrill & Co. The bad news behind the good news: Of the $9.4 billion in total profits, $8 billion came from just three companies—Amgen (AMGN), Genentech (DNA), and Gilead Sciences (GILD). The rest lost a combined $6 billion, with just 67 of the survey's 370 publicly traded companies in the black. The financial crisis pushed the market capitalization of almost 60% of the biotechs to well below $100 million. And more than 120 firms had less than six months of cash on hand, a 90% jump over 2007. "After 40-plus years of relatively easy access to capital, the rules of the game have changed," says Burrill CEO Steve Burrill.
The Car a U.S. Invention? Nein
Niger yellowcake it's not. But did President Obama goof in front of Congress on Feb. 24 when he said "the nation that invented the automobile cannot walk away from it"? Conceding that it's tough to name the first inventor as the auto evolved, the Library of Congress Web site nonetheless identifies Germany's Karl Benz as the builder of the first gas-powered car in 1885 or 1886. Chatter about Obama's claim to the contrary was "all over Germany," says Josef Ernst, a spokesperson at Daimler, which owns Mercedes-Benz. Ernst says he even tried to contact Obama through the President's Twitter account (silent since he took office) to set the record straight. He also waggishly suggested to Daimler "that when Obama next comes to Germany, he should get picked up in a replica of the original Benz car." Says White House spokeswoman Jen Psaki: "There may be some question about who invented the car, but make no mistake—we still make the best ones here in America."
Courting the Foreclosed
To cope with the dismal economy, some apartment landlords are turning to a market they once tried to avoid: those facing foreclosure. Houston-based Camden Property Trust (CPT) even buys lists of people about to lose their homes, signing up tenants if they're working and current on credit-card and other bills. "We'll forgive a foreclosure, as long as they didn't totally blow up their credit," says Camden CEO Richard Campo. It seems to pay off. Camden's average monthly rent in Las Vegas, where it is the largest apartment owner, was $843 in 2008's fourth quarter, up slightly from a year earlier. Average vacancy rate: up only a bit, to 5.7%. At the peak of the boom, in 2006, up to 24% would leave yearly, Campo says. "People who hadn't been able to make their rent would say, 'I just bought a $200,000 house, ha, ha, ha.' " Now nobody's laughing.