Coke's Ivester Shakes Up Management - TheStreet

Coke's Ivester Shakes Up Management

The CEO moves to put his stamp on the soft drink giant.
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M. Douglas Ivester, chairman and chief executive of


(KO) - Get Report

, put his stamp on the soft drink company's future with the announcement Friday morning of a series of restructuring moves.

Analysts say the changes put executives on notice that another fiscal year like the current one is unacceptable.

"They are not happy with the performance of the stock and the numbers it's been turning in lately," said Chief Investment Officer Michael Schroeder of

Wasmer Schroeder & Co.

, which doesn't disseminate ratings publicly. His firm hasn't underwritten for Coke. "It's not a surprising move and it's not an unusual move. It is definitely a noteworthy move."

Coke's stock was in a steady decline since June, falling from the low 70s to the mid 40s earlier this month before recovering to its current level of 58 7/16, which was down 3/8 today. Quarterly earnings that were released earlier this month declined for a fifth consecutive quarter. A struggling world economy has made for difficult financial times, and Coke also had to recall products in Belgium and France last spring.

"Management changes have been in the works for a while," said Ann Gurkin,

Davenport & Co.'s

beverage analyst, who recently upgraded Coke to accumulate from underperform. Her firm doesn't do underwriting. "This is not a rash decision. But I think they waited until things looked better before announcing them."

The changes consolidate seven business units into three that all report directly to Ivester, including the potential appointment that would make the soft drink titan's current vice president and controller, Gary Fayard, the new chief financial officer. Promoting Fayard hinges on the board of directors' approval, which could come at Coke's December meeting.

"The new structure we are announcing today will allow our company to move forward with a better alignment of our resources against the tremendous volume and profit opportunities we see before us," Ivester said in a statement.

Fayard would continue reporting to James Chestnut, the current chief financial officer. Chestnut will assume several new responsibilities that include corporate services, global communications, governmental relations and other duties, while maintaining his financial and business responsibilities.

Other changes consist of consolidating various business units into current operations, all of which will report to Ivester.

Ivester, who became Coke's president in 1994, was named chief executive in October 1997. The restructuring -- the Atlanta-based company's first since the early 1990s -- is happening now because economies worldwide are beginning to show growth potential, a company spokesman said.

"As we begin to see those economies grow, it makes sense to do the consolidation and go forward," said spokesman Randy Donaldson.

Gurkin also noted that Ivester still did not name a president. Both Gurkin and Schroeder said Ivester's style is much more hands-on, and by naming a president would place another level of management that could interfere with that plan.

"He has his style how Coke should be managed from the top," Schroeder said. "Time will tell whether it's the right style."