Usually when a company announces an executive departure the news comes out in a press release with a header along the lines of , "So-and-so to retire, search begins for successor," or, "XYZ Corp. CEO resigns, interim CEO appointed," etc.
That's why the one generic drugmaker Mylanput out the night before last caught me eye. "Mylan Parts Ways with Chief Financial Officer Jolene Varney," is what it said. Not, "Mylan CFO Jolene Varney Resigns." And the text of the release didn't contain the boilerplate stuff like, "Varney has decided to pursue opportunities outside the company." And no quote from anyone within the company saying, "We sincerely thank Ms. Varney for her service during her short tenure and wish her all the best in her future endeavors." Nope. The headline was followed simply by, "Mylan Inc. today announced its decision to part ways with its chief financial officer. Executive recruiting firm Korn/Ferry International will resume its search immediately for a qualified candidate and, in the interim, Mylan will continue business as usual." Varney had been on the job for just a few months.
The oh-so-brief press release prompted one analyst to turn the tables on Mylan. Caris & Company's David Moskowitz titled his research note to clients the morning after, "Parting Ways With Our Rating; Downgrading to Average from Buy-Reducing Target to $14."
And Moskowitz really took MYL to task. "The comfort we had in a new set of eyes on the financials is gone, and the chance that something could be wrong with MYL's accounting or other areas of the business has increased," Moskowitz wrote. "Of course, the business may be fine, however, if that is the case, a bad choice for CFO does not inspire confidence in senior management's decision making, in our view." The shares fell in Wednesday trading.
JPMorgan analyst Chris Schott isn't cutting his Outperform rating on Mylan, but he is cutting the company some slack. He's telling clients, "CFO departure appears benign." The announcement that Mylan and Varney would part ways was made the night before MYL's analyst and investor meeting at the West Virginia manufacturing plant that recently came under scrutiny and a short time later was cleared. Schott says Varney's quick exit was a "core topic" of discussion at yesterday's get together. "The company's commentary," Schott writes, "suggested that Varney's departure was driven primarily by fit issues, as compared to something more serious. As a reminder, Varney had been with MYL since May 28 and had no prior CFO or generic industry experience." JPM makes a market in MYL and has done and wants to do more investment banking for the company. But the firm will now have to negotiate that business through a new CFO.
Update: Well, Moskowitz was at the same analyst/investor day yesterday and this morning is adding some color to his previous call.
"Management directly addressed our note yesterday and emphatically stated that there are no accounting or business disclosures linked to the 'parting of ways' with the CFO," Moskowitz writes.
And he adds, "(The) CEO stated that her departure was based purely on work styles and that she wasn't a good fit."
He maintains that management "remains an overhang," but says after yesterday's business update that there could be "upside" in the third quarter.
Takin' A Short Break
I'm off to Columbus for a long weekend at the USC-Ohio State game. While regular readers will know who I'm rooting for, I'm uncharacteristically reluctant to call this one. We have a freshman QB who looks impressive, but who has played one college game against a lower-tier team. I've watched a game at the horseshoe before (USC won when the game was called with minutes remaining because of a thunder/rain/lightning storm) and it's among the loudest stadiums I've ever been to. Plus, the Buckeyes want revenge for last year's drubbing. Goose bumps, though, when the Buckeye band does the script Ohio and the sousaphone player dots the "i." It's one of the greatest traditions in college football and one of the awesome spectacles that makes me such a fan of the game. That said...Fight On!
Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman