Failure to find new chief executive prompts the resignation of two company directors
It has not been a good couple of weeks for Reed Elsevier. Late last month, the giant publisher reported a decline in earnings and warned that the continuation of unfavorable trading conditions meant that the company was unlikely to see any significant profit improvement in 1999. Last week came word that the company was re-opening the search for a new chief executive after its leading candidate -- widely believed to be Simon &Schuster's Jonathan Newcomb -- had turned down the position.
The failure to find a new CEO after an eight-month search prompted two Reed Elsevier board members to resign. Citing differences of opinion over the recruitment process, Pierre Vinken, founder of Elsevier, and L k van Vollenhoven both resigned last week. Vinken, who was due to retire at Reed Elsevier's annual meeting April 14, is being replaced by Morris Tabaksblat. Tabaksblat has also been named non-executive chairman of Reed Elsevier. R lof Nelissen, a member of the Elsevier supervisory board, is set to replace van Vollenhoven on the Reed Elsevier board.
Reed Elsevier, which is the parent company of Publishers Weekly, has been looking for someone to occupy the newly created post of chief executive officer, a position that would combine the duties now being handled separately by co-CEOs Nigel Stapleton, representing Reed, and Hermann Bruggink, representing Elsevier. Stapleton and Bruggink are expected to remain in charge of Reed Elsevier until a CEO can be found.
The distractions caused by the search for a CEO is thought by some analysts to be partially responsible for Reed Elsevier's disappointing 1998 results. Adjusted pretax profits fell 6% in the year to £773 million ($1.28 billion) on a 6% sales increase to £3.16 billion ($5.25 billion).
Last year was seen as a period of change and development, with underlying progress affected by short-term earnings dilution arising from the sale of IPC magazines for a gain of £692 million, adverse currency movements, an ongoing investment of £80 million in electronic publishing, and a sharp decline in the travel publishing businesses.
Commenting on the results, Stapleton and Bruggink said that the company has now refocused its portfolio on scientific, professional and business publishing and feels that "future growth will be driven by our high quality content and our rapidly developing ability to deliver our products electronically to customers." New developments include the commercial launch of ScienceDirect, an online database containing more than 1000 scientific journals; the launch of Butterworths Direct, an online legal service; and the updating of Lexis-Nexis, the business and legal database.
