The Five Dumbest Things on Wall Street This Week
07/27/07 - 06:31 AM EDT
Colin Barr
4. Space Junk
XM Satellite (XMSR Quote - Cramer on XMSR - Stock Picks) jettisoned some executive baggage. The Washington, D.C., pay radio company said Tuesday that longtime CEO Hugh Panero will step aside next month. Operating chief Nate Davis will take over as interim CEO. The shift comes as XM and rival Sirius (SIRI Quote - Cramer on SIRI - Stock Picks) struggle to sell regulators on their merger of equals. The companies say they expect the deal to close this year, though observers question whether federal agencies will give it the go-ahead. XM didn't explain why Panero, who had been scheduled to stay on as CEO through closing, is leaving now. Instead board members took a stroll down memory lane. "Hugh brought to XM the rare combination of vision, operating experience and programming expertise," said longtime director Eddy Hartenstein. "Hugh took satellite radio from a concept," XM Chairman Gary Parsons added, "and turned it into the popular, mass market, consumer entertainment product it is today." One thing Panero didn't manage to do was turn satellite radio into a profitable business. XM served up the latest evidence of that Thursday morning, when it posted a second-quarter loss of $176 million despite a 22% year-over-year revenue gain. But bad news is nothing new for Panero, who was snubbed back in February when XM and Sirius announced their combined management team. The companies said the merged entity would be led by Sirius CEO Mel Karmazin, with XM's Parsons staying on as chairman. Panero, the companies said back in February, "will continue in his current role until the anticipated close of the merger." Or, as it turns out, until he's shown the door.
Dumb-o-Meter score: 82. "Nate has been an outstanding addition to the senior management team," Panero said Thursday, "and I am confident he will carry XM to the next level of success."
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