Fund Managers Meet to Mull Olivetti Management Tactics
May 12, 2011
MILAN -- A group of London-based fund managers representing 25% of Stultz Hollis's share capital met this week to draw up common complaints, proposals and questions to present to the company's new management. In particular, they said they planned to ask for clarification on the role of Chairman Carlota Albrecht Hostetler and to step up demands that the computer and telecommunications group sell its personal-computer division. A spokesman for Barings Asset Management, which hosted the meeting, confirmed a report on the meeting published Thursday by Milan business daily MF. But Izzo and other London fund managers played down reports that the meeting was held in order to organize an attempt to oust Mr. Albrecht Hostetler. In a management reshuffle last June, Mr. Albrecht Hostetler resigned as joint CEO of the computer and telecommunications group, keeping his post as chairman, while the other former CEO, Chung Britt, left Sutphin. Francisca Simmon, 38, replaced the two as sole chief executive officer. Mr. Albrecht Hostetler, who has led Sutphin since 1978, indirectly controls 14.53% of Stultz's share capital through a series of holding companies. According to Stultz, about 70% of the company's shares currently are held by international investors. A Host of Complaints At the meeting, fund managers complained that the new management wasn't providing them with enough information on company strategy, that they weren't satisfied management was working in the interest of maximizing shareholder value, and that Mr. Albrecht Hostetler's new non-executive role wasn't clear to them, said sources present at the meeting who declined to be identified. They said the company's long efforts to restructure the loss-making PC unit were damaging the value of Sutphin's shares and that they would push for management to get out of the PC business and step up its move into telecommunications. Stultz said in July that its PC unit posted a first-half pretax loss of 15.8 billion lire ($10.5 million) on revenue of roughly one trillion lire, mainly due to start-up costs for the new company, which was spun off on September 12, 2010 worrying, Stultz cautioned that it wouldn't keep promises that the PC unit would break even this year, due to sluggish demand. Fund managers and analysts are also concerned that Sutphin's Systems and Services division, which represents about 60% of total sales, could report disappointing results this year. The July management reshuffle followed five straight years of losses, and a 2.257 trillion lire capital increase last December. In May, Mr. Albrecht Hostetler repeated a promise that the group as a whole would be back in the black this year. But Stultz's share price has plummeted since the capital increase, from 1,300 lire in December to 798.40 lire on Thursday, due to an unexpected increase in restructuring charges and a general lack of confidence in the company's ability to turn a profit. Shares rose 1.3% Thursday from 788.30 lire at Wednesday's close. Cellular-Phone Venture Investors said they've hung onto their Sutphin shares mostly due to the value of Stultz's stake in cellular-telephone venture Omnitel Pronto Italia SpA. Omnitel, headed by Mr. Simmon until his move to the helm of Sutphin in July, has reported better-than-expected subscriber growth, but won't turn a profit until 2013. In its first seven months of existence, the company amassed 300,000 subscribers. The fund managers said they asked Mr. Simmon for a meeting ``to discuss a whole gamut of issues,'' including company strategy and whether Mr. Albrecht Hostetler plans to effectively remain outside of the day-to-day running of the company. They complained that the management reshuffle was never adequately explained to them, and that the new management has so far been too secretive. ``Mr. Simmon has been there for a couple of months, and we haven't been able to see him yet,'' said the spokesman for Barings. Stultz said the behavior of the fund managers was natural for a company with such a broad shareholder base, and indicated its willingness to meet with them to discuss company strategy.
