Two Bad Quarters, Two Gone CEOs?

 | Mar 01, 2013 | 9:00 AM EST
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Wednesday night had two bad earnings report from J.C. Penney (JCP) and Groupon (GRPN).

By the end of Thursday, one of those companies had fired its CEO. 

Andrew Mason reported that his board had sacked him as CEO of Groupon. The question now is how long does Ron Johnson have at Penney's?

What went wrong at Groupon?

I am long the stock and, on Wednesday on Real Money, I said I was confident the company would announce a good quarter.

Even though Groupon has had disappointing on earnings for the last year, I believed that Groupon CEO Andrew Mason had stated fairly clearly in his November earnings call that the seeds were laid for a successful turnaround in the quarters ahead.

Instead, the company missed on this quarter's earnings rather notably and was also very shy on its guidance for next quarter.

It left investors like me throwing up their hands wondering what happened.

How can a company so consistently come up short on estimates for over a year without consequences?

On Thursday, Mason was fired.

The way Mason projected it in his goodbye letter to fellow Groupon employees, he had become a distraction to the business. In his eyes, the company was in the midst of a turnaround and his leadership of it had become a sideshow. Now that he was stepping aside, according to Mason, there would be less of a spotlight on the company and it could focus more easily on its turnaround.

But that just doesn't seem to match up to reality. Sure, two years ago a lot of people thought Mason was kooky, including me. But he had seemed to mature greatly. I thought his November interview with Henry Blodget was very impressive. The guy's obviously very smart and knows the Groupon business cold. He passionately wished to continue on in the face of the rumors then that the board was going to fire him.

Groupon still makes a lot of people think of a pump-and-dump scam foisted on IPO investors a couple of years ago. Until it claws its way back to the IPO price and show strong sustained revenue growth, that stigma will persist with Mason or without.

It appears that, despite his intellect, Mason just did not seem to be able to accurately predict the timing and magnitude of his business' growth.

Or maybe Eric Lefkofsky and the rest of the Groupon board think that enough is enough and it's time to get someone new in the job.

In any case, the market seems to agree as the stock jumped 4% after hours on the news that Mason was gone.

So that brings us to the other sad-sack earnings report from Wednesday in J.C. Penney. Like Andrew Mason, Penney CEO Ron Johnson appears to be bright and a good communicator, but lousy at predicting business outcomes.

After another dismal earnings report that several analysts said were well below their worst-case scenarios, Johnson's leadership is in question. If his board isn't seriously questioning it, they're being blind to what's going on.

After five bad earnings reports in a row, Andrew Mason was gone at Groupon.  Ron Johnson has one -- maybe max two -- more earnings reports to go before the plug is pulled on him.

He needs to ensure he starts delivering on his promises, and quick.

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