Why Lml Failed

Topics: Profit, Chief executive officer, Soft drink Pages: 3 (979 words) Published: January 10, 2013
In July 2012, Mr X, CEO of Corp Y, was preparing his presentation for tomorrow’s meeting with company’s board of directors and Investors. He has just rattled off a list of statistics describing the financial performance of Y (NYSE : YYY), the company he has run since late 2006. They show that it has been growing, earning high profit margins, and paying respectable returns to shareholders through dividends and stock buybacks. So, he wonders, what's the problem? Why on earth has he been taking such an infernal amount of heat from investors, Wall Street analysts, and the media? He clearly resents it. All these years he has been trying to transform a soft drinks company -- into a global enterprise with a product line that can prosper in a world where obesity is fast becoming the No. 1 health problem. Making that profound shift, he thinks, is "the right thing" to do. What's more, the company has been "performing while transforming," delivering those financial results. Yet for all that, the conventional wisdom is that he and Y are in trouble, return on investment is going down [Exhibit 1]. Projected profits are also not upto the mark, moreover investors think that there is no scope of improvement in near future too [Exhibit 2].

Company Background
Y is a global food and beverage leader with net revenues of more than $65 billion. Y, Inc. is founded by DMK, President and Chief Executive Officer of Y-Cola and HWL, Chairman and Chief Executive Officer of FL, through the merger of the two companies. Y-Cola was created in the late 1890s by CB, a New Bern, N.C. pharmacist. FL, Inc. was formed by the 1961 merger of the F Company, founded by ED in 1932, and the HWL Company, founded by HWL, also in 1932. During the Great Depression, X gained popularity following the introduction in 1936 of a 12-ounce bottle. With a radio advertising campaign featuring the jingle "X hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / X is the drink for you",...
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