CEOs the sacrificial lambs at failing dot-coms

Computer World –

The number of chief executives who left their posts rose last month, particularly at dot-com companies, many of which are shuffling their top ranks to appease impatient investors and venture capitalists, said analysts.

Last week, a report from Challenger, Gray and Christmas Inc. revealed that 129 CEOs left their jobs last month, and about one-fifth of them were from Internet companies. The total number of chief executive departures more than doubled from the same period last year.

"A couple of bad quarters are enough to do in most CEOs today," said John Challenger, CEO of the Chicago-based outplacement firm.

A year ago, publicly traded dot-coms with innovative business models were rewarded with a large market capitalization. But today, "there's pressure to produce revenue quickly," said Barbara Gomolski, research director at Gartner Institute Inc. in Eden Prairie, Minn. Investors and venture capitalists "are not as optimistic as they were a year ago," she said.

In addition, many founders of online ventures lack the managerial experience and business acumen that Wall Street likes to see at the helm of companies, said Sam Gassett, president of Austin, Texas-based recruiting firm Primus Associates LC.

Gassett said many dot-coms have changed their business plans in the past few months to target the most profitable pieces of their markets, but their founders may be too "technical" and not have enough business savvy to lead the way.

Last month's dot-com departures included Jeffrey Arnold, who resigned as co-CEO of Atlanta-based Internet health care firm WebMD Corp., as well as both the chairman and president of online postage firm Inc. in Santa Monica, Calif.

Rod Schrock, former CEO of Internet search firm AltaVista Co. in Palo Alto, Calif., resigned from the company after it laid off one-fourth of its staff in September. And Internet portal NBC Internet Inc. in San Francisco recently announced the resignation of its president and three other top executives.

Though CEO departures are often billed as "resignations," it's often a "euphemism for termination," Challenger said.

For information technology workers and other rank-and-file employees, a change at the top can be damaging to morale, said Gomolski. IT people may need to start projects from scratch when someone with a different set of priorities takes the helm, she said. And if a company ousts its CEO, employees often wonder if they are next, she said.

But unless an ousted CEO makes a high-profile blunder that leads to a company's demise, Gomolski said, his career prospects aren't necessarily doomed because technology skills are in such high demand. "There's such a shortage right now of people who have that experience," she said.

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