Share values for Cobham (COB) and Laird (LRD) headed in opposite directions after it was announced the former's chief executive, Bob Murphy, will leave the FTSE 250 defence contractor by the end of this year, giving way to David Lockwood, currently head of rival index constituent, Laird.
Rumours had circulated since July over the fate of Cobham's chief, although Mr Murphy reportedly had no inkling about the uncertainty of his future when he announced the group's $38m half-year pre-tax loss earlier this month. Mr Murphy's tenure hasn't been incident-free, particularly in the early part of this year. Operational difficulties and delayed shipments to customers from its wireless division precipitated senior personnel changes, a hefty impairment charge and a brace of profit warnings. To make matters worse, deteriorating cash flows and US dollar strength hampered the group's ability to fund the $1.5bn acquisition of New York-based rival Aeroflex. Eventually, Cobham was forced to go cap in hand to shareholders to the tune of £500m - and the rest, as they say, is history.
Mr Lockwood has been in the hot seat at Laird for just over four years and has seen the shares outperform the FTSE Technology Hardware & Equipment index for much of that time, though their relative performance has suffered since the first quarter. Nevertheless, Mr Lockwood, an ex-stager for both GPT (Marconi) and BAE Systems, looks to be a "practical appointment" for Cobham, according to Jefferies' aerospace/defence analyst Sandy Morris, due to the businesses' "complementary overlap". His first task may be to re-examine Cobham's move away from defence markets given global military spending is ratcheting up again.
