Waste Management Names Myers to Lead Turnaround

Accounting problems and profit shortfalls have hamstrung the waste-disposal firm.
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Waste Management (WMI) Tuesday morning named longtime transportation-industry executive Maurice Myers chairman, chief executive and president, ending a search that lasted almost three months at the troubled waste-disposal concern.

"In Maury Myers we have found a leader with the skill and experience to rebuild WMI," Ralph Whitworth, the company's current chairman, said in a statement. Myers will replace Whitworth and the interim president and chief executive, turnaround specialist Robert "Steve" Miller. Whitworth and Miller will remain on the board of directors and the board's executive committee, with Whitworth retaining chairmanship of that panel.

It now falls to Myers, who starts Wednesday, to extricate the company from the mire of accounting problems, profit warnings, management turnover and an insider trading scandal that has plagued the company's stock, pulling it down 68% over six months. He is certainly aware of the challenges ahead. "It's no secret that Waste Management has to restore investor and customer confidence," Myers said in a statement.

The stock was down 1/8 to 18 1/4 in Monday morning trade.

It settled down 7/16 to 17 15/16.

Observers know where Myers might need to focus. "Accounting, accounting, accounting," emphasized analyst Jaimi Goodfriend of

First Analysis

, which hasn't underwritten for the company. "Waste Management may have the best assets in the business, but the first step is to clarify confusion on the accounting issues." Goodfriend rates the stock neutral.

Myers joins Waste Management from

Yellow

(YELL)

, where he has served as chairman, chief executive and president since 1996. Yellow is the parent company of

Yellow Freight

, one of the nation's oldest and largest trucking companies. Before joining Yellow, Myers was a top executive in the airline industry, at

America West Airlines

(AWA)

,

Aloha Airlines

and

Continental Airlines

(CAL) - Get Report

.

Myers' skill at financial turnarounds at many of these companies should serve him well at Waste Management. "They need a fix-it guy and from what I understand they've got a fix-it guy," said Goodfriend.

"He sounds perfect because he comes out of a logistics-intensive business," noted analyst Hugh Holman of

Banc Boston Robertson Stephens

. He added, "The homegrown talent in this industry has never been terribly good, and this is the company's second very healthy step recruiting outside the industry." The first was the appointment of consultant Jim Boyle as acting director of information technology. He is also an associate at

Perot

, Ross Perot's computer-services company.

Whitworth was quoted in Tuesday's

Wall Street Journal

saying, "We project this to be a three- to five-year operational turnaround." Holman underscored that, explaining, "This will be a very long-term, arduous process that requires a bulldog." Holman rates the company a long-term attractive and his company has not participated in any underwriting for Waste Management.

The company is expected to report its third-quarter earnings today. Almost three weeks ago, it issued a profit warning and disclosed that a new round of accounting problems discovered in an internal review was "likely to have a material unfavorable impact" on those numbers. Those problems could result in a $1 billion charge. At the same time, Waste Management is expected to release the full results of the accounting review.