NEW YORK (CNNfn) - Corporate turnaround specialist Al Dunlap, whose penchant for slashing jobs earned him the nickname "Chainsaw Al," was fired from the top post at Sunbeam Corp. after directors said they had "lost confidence" in his leadership.
Sunbeam directors made the decision to fire Dunlap after a weekend meeting. Dunlap's dismissal comes less than two years after the company recruited him.
Sunbeam employees reportedly cheered the move openly when it was announced Monday.
Dunlap had been trying to sell Sunbeam but had failed to attract serious buyers. Last week, Dunlap made a pitch to bankers and institutional investors in New York to take part in a $1.7 billion loan syndication that was being underwritten by Morgan Stanley & Co., BankAmerica and First Union Corp., according to published reports.
Instead of generating an expected first-quarter profit, Sunbeam reported a loss of $44.5 million, or 52 cents a share. That compares to a profit of $6.8 million, or 8 cents a share, a year ago.
On May 11, Sunbeam said it expected operating earnings in 1998 of $1 a share, excluding integration costs, and 1999 earnings of around $2 a share.
To replace Dunlap as chairman, the directors appointed Peter Langerman, an investment adviser to Michael Price, a shareholder activist and the president of Franklin Mutual Series Fund Inc., which held a 17.4 percent equity stake in Sunbeam as of March 30.
As acting chief executive officer, the board named Jerry Levin, the chairman of Revlon Inc. and a long-time aide to Ronald Perelman, who also owns a large stake in Sunbeam.
Sunbeam, based in Delray Beach, Fla., also said it plans to expand its board to include another member designated by Franklin Mutual Series Fund and two designees from Perelman's MacAndrews & Forbes Holdings, which holds a 13 percent interest in Sunbeam.
Business is "fundamentally sound"
Sunbeam Corp., whose products range from Grillmaster grills to Oster blenders and electric blankets, also said Monday it expected to incur a second-quarter operating loss and would fail to meet recent earnings forecasts. But the board members insisted the company's financial health is "fundamentally sound" and would revive under invigorated new leadership.
Sunbeam, in a statement Monday, sought to depict Dunlap's removal as a product of deep-rooted differences over his managerial style and for his inability to lift Sunbeam's (SOC) sagging stock price, which edged down to a 52-week low of 18-1/16 at its Friday close.
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That marked a stunning 65 percent drop from the company's 52-week high of $53 set in March. Sunbeam shares began their downward trajectory on signs that Dunlap was failing in his turnaround mission.
"The outside directors have unanimously taken this decisive action because we have lost confidence in Mr. Dunlap's leadership," Langerman said in a statement. Langerman said the firing did not result from concerns about the company's 1997 audited financial statements.
Sam Stovall, sector analyst at Standard & Poor's, said Sunbeam directors were apparently not willing to give Dunlap any more time to execute his turnaround strategy.
"In some ways, a little person likes to say 'Well, he got what he did to so many people.' It does work both ways, with obviously the goal being to make the business work better. But I guess he had a certain time frame and he did not meet that time frame," Stovall said.
Fred Isquith, partner at Wolf Haldenstein, said Dunlap's reputation probably resulted in him having less time to execute his strategy than others would have been allowed. (220K WAV) or (220K AIFF)
When Dunlap arrived at Sunbeam in July 1996, he slashed costs and obliterated bloat by axing nearly half the company's 12,000 employees. In May 1997, Dunlap unveiled another round of no-holds-barred downsizing.
Sunbeam acquired Coleman Co., Signature USA Inc. and First Alert Inc., all makers of durable goods, for $2.5 billion in November 1997.
To absorb the newcomers, Dunlap announced 6,400 additional job cuts.
But despite his promises to reinvigorate Sunbeam, Dunlap's formula fell short. The stock price began swooning in March amid concerns that Dunlap himself was not taking enough of a hands-on approach to running the company.
His recent engagements to promote a new book, "Mean Business," have further diverted his attention, say some analysts.
In the early 1980s, Dunlap served as head of Lily-Tulip Co.. He ended up after several other CEO stints at Scott Paper Co. in 1994, from where he climbed to the top post at Sunbeam.