No Tears for Hank McKinnell

By choosing a new chief executive who has spent more time working for Big Mac than for Big Pharma, Pfizer(PFE) certainly caught Wall Street's attention.

The initial response to Jeffrey Kindler, one of three Pfizer vice chairmen competing for the job, appears to be favorable partly because Kindler isn't Henry "Hank" McKinnell, who stepped down as CEO immediately on Friday. McKinnell will remain chairman until February, leaving 12 months earlier than the mandatory retirement age of 65.

Barbara Ryan, Deutsche Banc Securities analyst, said Monday that the action by Pfizer's board shows its acknowledgement "that an abrupt departure of from the current modus operandi was critical." She has a buy rating on Pfizer and doesn't own shares. Her firm does or seeks to do business with companies covered in research reports.

David Moskowitz of Friedman Billings Ramsey wrote in a research report that Pfizer's management "has steadily lost all credibility, in our view, guiding for obviously unachievable objectives and teaching the industry a painful lesson on mega-merger failure." Still, Moskowitz maintains an outperform rating on the stock, but he doesn't own Pfizer. His firm seeks to do or does business with companies it covers.

Pfizer's stock has fallen almost 40% since McKinnell took over as president and chief executive on Jan. 1, 2001. He added the role of chairman in May 2001. Since 2001, the Amex index of large drug stocks, including Pfizer, dropped 21.7%.

Since McKinnell took over, Pfizer's sales nearly doubled, aided by the 2003 acquisition of Pharmacia. As president and chief operating officer, McKinnell played a key role in Pfizer's 2000 purchase of Warner-Lambert. However, he also came under after Pfizer issued a profit warning and withdrew two years of guidance last October.

Recently, Pfizer's stock was unchanged at $26.11 on heavier than average trading.

Outsider on the Inside

"We think that an outsider is the right choice," says David Risinger of Merrill Lynch, who updgraded Pfizer to buy from neutral. "But we note that Jeff Kindler is somewhat unproven as a pharmaceutical executive."