Maytag Through The Wringer

Did CEO Ward take his eye off low-end products?

Lloyd D. Ward had a short honeymoon. Barely into his second month as CEO at Maytag Corp. (BW, Aug. 9), he's facing his first crisis. On Sept. 10, the appliance maker warned investors that third-quarter sales and earnings would be flat compared with last year--not the 18% jump from 84 cents per share to 99 cents analysts had predicted. The stock dropped 26% on the news and is now down almost 50% from its high of $75 last July.

An earnings shortfall is one thing, but some analysts and investors complain Maytag should have disclosed the problem quicker. "With an earnings miss of this size, it's hard to imagine they didn't have prior knowledge of it," says one investor who dumped more than 1 million Maytag shares. And given the heavy sell-off in the stock leading up to the announcement--and a huge jump in put option volume--it appears some investors knew of the shortfall before others.

Ward, a former PepsiCo exec, strongly denies that Maytag selectively disclosed information. "Once we had clarity on the situation, we went public with it," says Ward, who is now busy smoothing relations with the investment community that had bought into his vision of remaking the old white-goods maker with high-margin, high-tech washers, stoves, and other appliances.

Whirlpool and General Electric, however, have been stealing share in the low end of the market. And sales of Maytag's pricier wares aren't enough to make up for mass-market losses. "We've got to find ways to support and grow our value brands," says Ward, who has announced a corporate restructuring to speed the effort. But with Whirlpool and GE preparing to introduce more competitive products at the high end, Ward's job won't get any easier. "There's usually more than one downward adjustment with these things," warns analyst Justin Maurer of McDonald & Co. Investments. If so, this may not be Ward's last gig on the spin cycle.

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