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howard schultz of starbucksI first heard the news that Starbucks legend Howard Schultz would once again become CEO of the company via Twitter, and the tidings are accompanied by a generous measure of skepticism: Rick Turoczy asks, "I wonder if this means I'll still get crap coffee 90% of the time?" Baristas and buzz-mongers on Starbucks Gossip seem giddy ("Uncle Howie to the rescue!!!"), although even in the land of the faithful there is some suspicion, calling the decision "smoke and mirrors" and calling exiting CEO Jim Donald a "scapegoat." I call it a classic move for a company whose stock is tumbling: bring back whatever charisma we can yank from the back of the closet.

As Chairman, Howard Schultz was certainly still involved with company and its strategy. But the stock had been plunging throughout 2007 -- and has only tumbled further in 2008 with a downgrade from Bear Stearns. As I wrote in that post, the company's coffee quality was a predictor of its stock price, tumbling from its peak under Schultz previous reign. At one point, the baristas were pulling shots in high-quality, old-fashioned manual machines that coffee connoisseurs agree make far-superior espresso to that made in the newer, idiot-proof automatic models. Drip coffee was routinely thrown away if it was burnt. Now? I have to sweeten my lattes to disguise the taste of inferiority.

Bringing back an old chief executive -- and making a scapegoat (whether expressly in the press release, or just between the lines as is the usual way) of the Jimmy-come-lately CEO -- is a well-worn trick for a once-popular company whose stock is spinning every downward. It only rarely works, and Schultz will have to do a lot more than close stores to bring me back. To get me? You'll have to not only liven up the management team, but also your core product. I want good coffee back.

Investors, other than me, seem as pleased as the baristas -- they have given the stock a nearly-9% boost from its close at $18.38, up $1.65 to $20.03 as of 8 p.m. EST.

Howard Schultz CEO of Starbucks again: Is the coffee going to get better? originally appeared on BloggingStocks on Mon, 07 Jan 2008 20:00:00 EST. Please see our terms for use of feeds.

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