Investors, Xantrex board lose their patience; CEO turfed
You may recall a post I had in May regarding the struggles at Burnaby, B.C.-based power electronics maker Xantrex Technology Inc.
Well, things have gotten worse, not better. Last week the company issued an earnings warning, and yesterday it formally released its second-quarter results. The company had its first quarterly loss since going public 16 months ago. Margins keep falling. Power electronic sales to the wind market are going nowhere as competition grows. Attempts to lower costs through outsourcing are going slower than planned. And while there is potential to beef up sales in the solar market in Europe, an industry shortage of solar PV panels and Xantrex’s relatively small presence in Europe have held back potential growth.
Analysts, which thought the company would have orchestrated a turnaround by now, are beginning to lose faith. Xantrex shares have been downgraded and 12-month targets lowered. Today, shares dipped below $6, about one-third their IPO value. Meanwhile, the company says it won’t provide financial guidance for the rest of the year… so we wait some more.
No surprise, then, that Xantrex’s frustrated board of directors asked CEO Ray Rosewell to leave. Effective today, they have appointed fellow director John Wallace as interim CEO. Wallace was formerly a Ford executive who oversaw the automaker’s hybrid/fuel cell/electric vehicle program. He has also held interim CEO position at Avestor, a Quebec-based maker of advanced batteries.
Analysts I spoke with seemed happy with the move, mostly because it showed a desire on the part of the board to be more proactive. Fact is, the company under Rosewell hasn’t been proactive — management has largely been reactive to market conditions, something that chairman Mossadiq Umedaly told me today didn’t do justice to the company’s otherwise sound strategy/vision. He said Rosewell was a “mismatch” for the company, which needs to be better at anticipating challenges before being blindsided by them.
Let’s hope this management change, and current restructuring efforts, will get this cleantech engine humming again.
Tyler Hamilton is editor-in-chief of Corporate Knights magazine and a business columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the clean technology and green energy market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper.
