The media is eagerly waiting to jump into the void created by Merrill Lynch (NYSE: MER)'s succession struggle. And its decision this morning to let CEO Stan O'Neal retire and to appoint Alberto Cribiore as interim non-executive chairman is a good one. I think the board should figure out how Merrill should change its corporate strategy before picking a new leader. And I would recommend that it resist pressure to be forced into picking the leadership team before that new strategy has been hashed out.

If I was in Merrill's boardroom, I would be encouraging a debate about the following questions: Why does Merrill need to change its strategy? Why is it important to pick the new strategy before choosing a new leadership team? Shouldn't the board just hire a new CEO and ask the CEO to figure out the strategy?

Here's where I come down on these questions:

• Merrill needs to change its corporate strategy. Merrill is really three companies -- the successful wealth management part supported by 16,000 brokers and $2 trillion in assets under management, the corporate banking part in which Merrill is a middling player, and the volatile fixed income part that forced Merrill to take an $8.4 billion write down. Merrill should decide which of these will be attractive businesses for its shareholders over the next five years and find a way to sell or close the ones that can't earn their cost of capital.

Continue reading Merrill Lynch should fix its corporate strategy then pick new CEO

Merrill Lynch should fix its corporate strategy then pick new CEO originally appeared on BloggingStocks on Tue, 30 Oct 2007 10:35:00 EST. Please see our terms for use of feeds.