Last week we said the departure of top officers (particularly financial officers) is always a topic of scrutiny. Did they leave for a better offer, or because something was wrong? The fact that the CFO of Allied Defense (ADG), which is one of the new Small Cap Watch List members, is leaving for another job would typically be a positive sign.
Rockwell Automation, Inc. (NYSE:ROK) announced today that James V. Gelly has resigned from his position as the company’s senior vice president and chief financial officer to pursue new challenges and opportunities. Gelly is expected to remain with the company’s finance function over the next several months in an advisory capacity, in order to ensure a seamless transition.
No new position named, and there can’t be much of one if Gelly has time available to advise his former employer. It is also somewhat uncomfortable that Gelly is leaving just after the company received $1.7 billion for the sale of a large division. That money needs to be put to use, and typically the CFO is instrumental in such decisions.
At the time the unit was sold, we said:
The unit comprised just over 18% of the company’s sales in FY06 but only 4% of segment operating income. The sale values it at 15% of the company’s enterprise value, which seems to us like a solid price.
We still believe that, as we have noted before, if ever there was an industry poised to do well in today’s economic environment, Rockwell (factory automation) is in it. However, the stock has sinced bounced along going basically nowhere, and today’s news doesn’t offer much comfort.
ROK 1-yr chart: