Friday, September 30, 2011

Fortune's Most Powerful Businesswomen

Yesterday morning, I caught a few minutes of CNBC's typical shallow business reporting. The segment featured Fortune's 2011 edition of their annual 'most powerful women in business' rankings.

Kraft's Irene Rosenfeld (CEO since June 2006) has, according to the magazine, replaced Pepsi's Indra Nooyi (CEO since 2007) at number one. Nooyi slipped to second place.

Nearby is a two-year price chart for Rosenfeld's Kraft, Nooyi's Pepsi and the S&P500 Index.

Kraft isn't such a bad call over the recent period. It's up 30% over the period, although I think the Cadbury acquisition, which fueled it (late 2009-early 2010), was largely unnecessary. After all, as I wrote in this post, all Rosenfeld did was buy it, then combine the two firms' confectionery businesses and announce a spin-off. It's not too much of a stretch to suggest that much of Kraft's/Rosenfeld's recent outperformance was from Cadbury, not her own organic businesses.

In effect, she overpaid for Cadbury's growth, then added Kraft's similar units for a spinoff. Which could have been done separately, as I originally suggested. Now she's spinning off the part which appears to have driven the combined firms' outperformance of the S&P.

Pepsi's Nooyi, though, is clearly struggling. How does such failure make her a powerful business woman?

The second chart shows the same three price series over the past five years, since Rosenfeld owns that track record entirely, and Nooyi owns most of Pepsi's for the period.

While Nooyi's performance is relatively less-worse than the other two, Rosenfeld's is, not surprisingly, less good. The Cadbury acquisition turned things around for Kraft, which means, in effect, that if you held the shares when Rosenfeld took over Kraft, you saw a loss nearly the same as the S&P.

So from a longer, more accurate historical perspective, neither of Fortune's top two most powerful businesswomen have managed to significantly outperform the S&P. They barely beat the index, and destroyed value for their shareholders.

And Fortune celebrates these two women CEOs? What- as role models?


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