The automation world and most ABB employees were very surprised recently (mid-Feb. 08) when, midst the announcement of excellent financial results, CEO Fred Kindle (German pronunciation Kindler) left the company.

In 2007, ABB net income more than doubled from $1.4B to $3.8B while profit grew 57% to $4B and revenues were up 25% to $29.2B. Profit for Process Automation jumped 26% from $541M to $683M, with revenues up 18% to $6.4B; margins increased from 9.9 to 10.6%. Bookings were up 21% at $7.9B. ABB announced doubling of its dividend and, with lots of cash in hand, $2B buyback of shares.

So, with these spectacular results, why did Fred Kindle (48) leave? The board said: "irreconcilable differences". Fred Kindle said nothing.

I listened to a media and analyst conference call where several persistent press bulldogs brought up the question "Why?" and the Board stubbornly refused to elucidate beyond, "It was by mutual consent, and we have all agreed not to discuss it."

ABB was on the brink of failure in mid-2002, and the company re-balanced itself under Chairman Jurgen Dohrmann and Process Automation head Dinesh Paliwal. Fred Kindle joined the company in Sept. 2004 and took over as President and CEO in January 2005, which evidently disappointed Dinesh Paliwal who then left to run his own show.

Fred Kindle managed a period of strong organic growth and profit. After his exit, the ABB board kept expressing their thanks to him for "driving the company to the extraordinary level of performance over the last three years". But they refused to comment on the reasons for his departure. ABB's head of human resources, said that Fred Kindle wasn't fired, and was allowed to collect his salary, options and annual bonus payments.

Here is an insider's summary of what happened: The decision to force Fred Kindle out was instigated by ABB Chairman Hubertus von Grunberg, and unanimously endorsed by the board. Fred Kindle is a conservative manager, focused on planning, execution and detail. During his tenure as CEO, he failed to make any significant acquisitions, despite sitting on a cash pile of $5.4B, with the ability to raise twice that much through debt.

In Sept. 07, Fred Kindle said that ABB had looked at 100 possible acquisition targets, but shied away from any deals because "prices were too high." He insisted that ABB hoped to execute a large acquisition or several midsize transactions over the next 2 years. Evidently, that was too conservative for von Grunberg, whose aggressive management style differed markedly, causing tension between the two. Clearly Fred Kindle was also getting frustrated with the push to make a big acquisition. It needed vision and talent which he just didn't have.

The board's patience ran out and it decided to replace Fred Kindle. With the CFO acting on an interim basis, the search for a new CEO is on. At the news conference, von Grunberg proclaimed that ABB was seeking a CEO with acquisition experience, providing more clues as to why Fred Kindle was exited and what lies ahead for ABB.

With a potential cash-stash of over $10-15B, ABB wants and needs to make a big acquisition - not several smaller ones. My own considered opinion is that US-based Rockwell Automation is the primary target. Rockwell stock has dropped from a high of 75 to the mid-50's, making them an attractive target. Read my commentary (below) on why Rockwell can/should be acquired.

CEO Kindle Leaves ABB:
http://www.automationworld.com/view-3950

ABB boss quits after strategy row:
http://news.bbc.co.uk/1/hi/business/7242373.stm

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