Procter & Gamble's forecast critical to CEO's tenure

Tue Oct 23, 2012 1:09am EDT
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By Jessica Wohl

(Reuters) - Procter & Gamble Co (PG.N: Quote) Chief Executive Bob McDonald's efforts to fend off activist investor William Ackman are not likely to be helped by the company's quarterly results this week.

The maker of Tide detergent and Gillette razors is expected to post its third consecutive decline in revenue and earnings per share when it issues fiscal first-quarter results on October 25. Analysts trimmed their targets when P&G gave a forecast in August that was below Wall Street's view.

Investors will also be watching for a forecast for the current fiscal second quarter and, less likely, any changes to the full-year forecast for signs that McDonald's plans for turning the company around are starting to take hold.

"If he comes in weak would anybody be surprised that the Bill Ackmans of the world have more power?" said Matt McCormick, portfolio manager at Cincinnati-based Bahl & Gaynor, which manages $7.3 billion, including 4.89 million P&G shares.

P&G disappointed investors by cutting its fiscal guidance multiple times during fiscal 2012.

Analysts have said that McDonald, who has run P&G since July 2009, may be running out of time to show that his strategy is working.

Ackman, whose Pershing Square Capital Management is P&G's 10th-largest shareholder, has publicly blamed P&G's top brass for high costs and declining revenue while saying that he understands the board wants to give McDonald time to repair years of damage.

Ackman met with board members in early September at a meeting in New York, where he laid out his complaints.   Continued...