Thursday, September 23, 2010

Jeff Sonnenfeld's Misinformed Praise of Ann Mulcahy & Xerox

With Larry Summers' resignation from the administration's economic team, every pundit worth her/his salt has been tossing names out for his replacement. Among business people, to my astonishment, former Xerox CEO Ann Mulcahy has been mentioned as an inside favorite.

Jeff Sonnenfeld lauded Mulcahy on CNBC yesterday afternoon as having had a "fabulous tour of duty" as the struggling firm's CEO.

If you look at the accompanying chart of the price series of Xerox and the S&P500 Index, it's hard to understand Sonnenfeld's enthusiasm for Mulcahy's performance.

Mulcahy became CEO of Xerox on 1 August, 2001.

After a smartly-rising performance from 1990-1999, Xerox's share price deflated, along with that of many other technology firms, when the tech bubble burst in 2000. By 2001, the company's stock price had begun to recover, but has basically flat-lined over the period of Mulcahy's management. The S&P did roughly the same.

How does this make Mulcahy some sort of management maven? And why does anyone even bother with Xerox anymore? It's been a technology also-ran for at least a decade.

Leave aside that she's never been considered an economist. Precisely what is it about Mulcahy's lackluster reign at the copier company that would make anyone believe she's somehow qualified to be an economic adviser, or process coordinator, at the White House?

I know. Sonnenfeld probably believes that without Mulcahy, Xerox would have performed even worse since 2001! That's the sort of performance that could well find Mulcahy a spot on the administration's economic team.

Because it certainly wouldn't have been due to Mulcahy's doing her shareholders any favors during her term as CEO at Xerox.

By the way, in his long-winded comments, Sonnenfeld confided that Summers' post was only created in the Clinton administration to give Bob Rubin a place to hang until he could be made Treasury Secretary. If that's really true, how about letting Summers leave and just save the money? It's not like we need more economists in the administration, is it? With their current performance, I'd say rather fewer might be better.

If the stories about Mulcahy being a serious contender for Summers' job are true, I'm not sure who comes off worst- Sonnenfeld, Mulcahy, or the White House.

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