Home » Behavioural Investing » Kraft Lays an Egg. Is it the Board’s Fault or Will Management be Brilliant $KRFT

Kraft Lays an Egg. Is it the Board’s Fault or Will Management be Brilliant $KRFT

Kraft Foods Group (Nasdaq:KRFT) laid a smelly egg and missed street expectations. If you`re gonna miss might as well be by a lot and get it all over.

Chief Executive Tony Vernon made some maudlin comments about not being happy but they are making progress on restructuring. He did not comment on the hedge loss of $46 million or how you can lose in a hedge when you were not supposed to be gambling. but somehow they did it.

Kraft is undergoing some major transformational moves. Most of the loss was restructuring and post-employment benefits. Read buy-outs for termination. Hopefully the ugly part is past and an upswing is around the corner.

Taking a look at the board you have two hard-core numbers guys in the shape of John C Pope and E Follin Smith. Given their resumes they probably counselled financial restructuring and are now waiting for the fruits of their advice to arrive. You can only cut so much. Then you expect dividends. The pressure will be on these two to validate the cost  cutting expense.

You have several career retailers and merchants. Terry Lundgren, Jeanne Jackson, Myra Maloney Hart. The bio`s do not talk to product brilliance. There does not seem to be a food industry expertise. They put it on the shelf and hope to move it. While Kraft needs to tap into this expertise the board may be over weighted in this skill set.

Two Pepsi alumni in the form of Abelardo Bru of Pepsi and Frito-Lay as well as L Kevin Cox of Pepsi Bottling and Virgin Mobile as well as being the EVP HR of American Express may bring some product experience to the table. But it`s too highly concentrated.

So while the cost cutting exercise continues somewhere in the Kraft empire a phoenix of new product and compelling offerings should be arising. This board does not have the expertise to navigate this landscape.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski