Commentary: Gary among CEOs who should go

Gary Pruitt of McClatchy Newspapers is listed among 10 CEO's That Need To Leave in 2008 by a blog called 24/7 Wall St.

The article is posted in the commentary section of our website or just click on the headline to read it.

Here is part of the blog article:

Pruitt led the Knight-Ridder buyout that was completed in June 2006 and this company performance has been utterly dismal ever since. At least Knight-Ridder shareholders received $40.00 cash, but they also received 0.5118 shares of McClatchy stock as well. McClatchy shares sat above $40.00 back then, and the Knight-Ridder holders that held on probably cry themselves to sleep each night wishing they had sold out entirely in cash.

The company's corporate governance section does show "an annual CEO review" and we would suggest the company get on this. It may be unfair to single out only one newspaper-related CEO and we cannot blame the entire newspaper malaise on him alone. Even a good and solid CEO can't keep the raw number of newspaper readers in the U.S. from disappearing faster than smokers.

But if you look at the share prices, you'll see how this one is performing extra poorly. Mr. Pruitt has been Chief Executive Officer since 1996 and President since 1995, and he became Chairman of the Board in 2001. What we think the board needs to do if they want to keep him in charge is to make him the non-executive Chairman and they need to bring in a new President & CEO that has more of a digital thrust in mind. The problems will likely continue under a new head, but this company looks ripe for new blood to lead the day to day operations.

If you back out goodwill at $2.5 Billion and other intangibles at $1.07 Billion, we look at its balance sheet being severely inverted. That isn't really unusual for the newspaper operators, but the company is going to need to sell of more of its dailies and it's going to have to make more severe cuts.

The last two years have been the darkest period since the late 80's to early 1990's. Just two years ago the stock sat at $60+, now shares are trading with a $13 handle. To add insult to injury, the company is expected to post lower revenues in 2008 versus 2007, and "earnings" are expected to decline as well if you evaluate the First Call earnings projections. The company recently gave a projected rise in earnings for 2008, but there is some disbelief from Wall Street. We've noted how Wall Street doesn't trust the numbers.