Bang & Olufsen Enlists Former BlackBerry Manager for Revival

(Bloomberg) -- Bang & Olufsen A/S enlisted a former BlackBerry Ltd. manager to try to revive the fading Danish electronics maker after consumers abandoned its sleek living room hi-fi systems in favor of listening to music on the go.

Kristian Tear, 55, will take over as chief executive officer from Henrik Clausen, who presided over three profit warnings in less than a year. The stock rose as much as 9.5% in Copenhagen on Tuesday but it dropped more than 70% over the previous 12 months, eroding the company’s market value to $225 million.

Bang & Olufsen, a yuppie icon of the 1990s, was caught off guard by the pace of change in the industry. The company’s pricey, design-led televisions and music systems have been undercut by cheaper manufacturers and consumers have shifted toward more portable systems powered by their smartphones and laptops.

The move to hire an outsider is an acknowledgment that the company needs a strategic shift, said Per Hansen, investment economist at Nordnet Bank.

“Investors no longer have confidence that B&O can succeed in turning itself around,” he said. They “want a plan B, where B&O thinks bigger.”

Tear, who said in a statement that he owns several B&O products, comes with experience at other technology companies that have struggled to maintain themselves after their heyday. He was vice president of the Europe region for Logitech International SA, the Swiss company that popularized the computer mouse, for four years. Before that, he was chief operating officer at BlackBerry.

Tear left the Canadian company along with other senior managers after its model Z10 flopped. He has also served at Sony Ericsson, a mobile joint venture that was dismantled in 2012 after its market share dissipated.

Clausen told the board he didn’t want to remain as CEO several months ago, and the company convinced him to stay until it found a replacement, Chairman Ole Andersen said in an interview. Under Clausen, Bang & Olufsen has been developing an “asset-light” approach, involving product-development partnerships with companies such as LG Electronics Inc.

“We are sticking to the strategy,” said Andersen, who was the chairman of Danske Bank until his ouster last year in connection with the botched handling of a money-laundering scandal. “Everyone on the board and in management support it.”

Sparkle Roll

Tear hasn’t been picked to prepare a sale of the company, according to the chairman. B&O rejected a bid from Hong Kong-based shareholder Sparkle Roll Holdings Ltd. three years ago.

Bang & Olufsen, which sells products such as $15,000 television sets, reported a second consecutive quarterly loss last week as retailers struggled to clear out excess inventory.

As consumer tastes changed, the company grew too dependent on outside retailers, which became reluctant to stock expensive hi-fi systems. It has cracked down on shops that shift products to unauthorized sales channels at discounts, but that exacerbated a drop in revenue.

Replacing Clausen doesn’t alter the outlook for this financial year, the company said Tuesday.

In March, Bang & Olufsen halted its share-buyback program to conserve cash. The company also has a new chief financial officer. Nikolaj Wendelboe took on that role this year after his predecessor departed in 2018.

--With assistance from Morten Buttler.

To contact the reporters on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net;Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net;Tasneem Hanfi Brögger at tbrogger@bloomberg.net

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