The Shareholder ForumTM

Electronic Participation in Shareholder Meetings

Forum Home Page [see Broadridge note below]

"E-Meetings" Home Page

"E-Meetings" Program Reference


Wall Street Journal, April 27, 2012 article


Need a Real Sponsor here


EARNINGS   |   Updated April 27, 2012, 6:49 p.m. ET

Angry Analysts Scorch P&G CEO


"Good quarter, guys" wasn't the message Procter & Gamble Co. Chief Executive Robert McDonald got when he dialed in to his company's earnings conference call Friday.


Instead, he confronted an unusually angry barrage from Wall Street analysts over the latest in a string of weak results from the world's largest consumer products company.

The analysts showed little restraint in venting their frustration after P&G lowered its profit outlook and said it would roll back recent attempts to raise prices in key markets.

P&G's sales rose 3%, which looked skimpy against an 8.5% rise for rival Unilever PLC and a 6.5% increase for Colgate-Palmolive Co.

P&G blamed weak developed markets and competitors' failure to follow its lead on price hikes. But some analysts blamed Mr. McDonald.

"It strikes me that from an execution perspective, P&G isn't delivering," said Citigroup analyst Wendy Nicholson.

"There's so many excuses: Not our fault, competition didn't follow the pricing; not our fault, Venezuela changed; not our fault, the developed consumer isn't robust," she continued. "And I just say to myself, God, where is the mea culpa?"

Tim Conder, a Wells Fargo analyst, and Ali Dibadj, a Sanford C. Bernstein analyst, echoed those sentiments, pointedly asking Mr. McDonald why P&G continued to stumble when its rivals managed to steer around the same obstacles.

"How much patience," Mr. Dibadj asked, "does the board have?"

Answering Ms. Nicholson, Mr. McDonald said: "Let me be clear. It is my fault. I am the CEO of the company. I do take responsibility."

The tone of the comments was remarkable by the often soft-shoe standards of Wall Street stock research.

Analysts are often accused of being overly forgiving with CEOs, a reputation they feed by regularly uttering words of congratulations on conference calls.

Good relations are important to preserve access to company executives, so criticisms, when they do come up, tend to be heavily couched.

But frustration is growing with P&G's performance. The company has failed to squeeze the expected results out of big areas like its beauty and grooming business, and has been slow to cut costs even as consumer demand weakened in the wake of the recession.

Those failings are evident in P&G's stock, which has changed little over the past two years. Meanwhile, Unilever's is up 13% and Colgate's is up 17%.

P&G shares fell 3.6% to $64.46 Friday, their biggest drop in 2˝ years. The decline came after the maker of Bounty paper towels, Pampers diapers and other household staples reported a 16% decline in earnings amid high commodity costs and charges related to cost-cutting plans.

The consumer products giant cut prices aggressively in recent years in a world-wide battle for market share. More recently, it has tried to roll back some of those cuts as input prices have risen.

Those moves cut into P&G's market share, which fell in 55% of the categories and countries where it competes.

As a result, P&G said it would again cut prices for powdered laundry detergent in the U.S., as well as on oral care, automatic dishwashing detergent, and blades and razors in North America.

P&G is also lowering prices on its laundry detergent in the U.K. and Mexico. The company says it implemented $3.5 billion in price increases this year and plans to roll them back by $200 million.

P&G announced a cost-cutting program in February that involves eliminating more than 4,000 jobs, streamlining its massive marketing budget and chopping other expenses by fiscal 2016.

The company plans to steer savings from the cuts into expanding its position in emerging markets.

For the quarter ended March 31, P&G reported a profit of $2.41 billion, down from $2.87 billion a year earlier. For the full fiscal year, which ends in June, the company said it expects earnings of $3.82 to $3.88 a share. It had previously forecast earnings of $3.93 to $4.03 a share.

Price controls in Venezuela, which required price cuts of up to 25% on certain P&G products, are also weighing on results for the company.

—Paul Ziobro contributed to this article

Write to Emily Glazer at


Copyright ©2012 Dow Jones & Company, Inc. All Rights Reserved




This Forum program is open, free of charge, to anyone concerned with investor interests in the development of standards for conducting shareholder meetings with electronic participation. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was encouraged by Walden Asset Management, and is proceeding with the invited leadership support of Broadridge Financial Solutions, Inc. and Intel Corporation to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.