Head guy at LEGO quits

[Tannerman]

Lego CEO Resigns Due to Financial Crisis

By Associated Press
Published October 21, 2004, 8:36 AM CDT

COPENHAGEN, Denmark -- Lego Co. chief executive officer resigned Thursday after the Danish toymaker reported it hasn't recovered from a deepening financial crisis despite an elaborate recovery plan that included increased focus on its classic products.

Kjeld Kirk Kristiansen, who's also a co-owner of the privately held, family-owned company, resigned after 18 years as CEO. He will become vice chairman of the company's board.

The new chief executive will be Joergen Vig Knudstorp, a former senior vice president for corporate affairs.

Lego reported Thursday it expects a pretax loss between 200 million kroner and 400 million kroner ($34 million and $68 million) in 2004. Including write-downs, the loss could reach 2 billion kroner ($339 million), Lego said.

Since it reported its first loss of $47.8 million in 1998, the company, whose colored plastic building blocks have been a favorite children's toy for decades, has been hit hard by increasing competition from the makers of electronic toys.

I'll offer my take on this later.

[Wally]

It is because of all of those free parts they are sending out.

[Tannerman]

The "resignation" was planned, from what I know. The guy who stepped down has only had the position since January, and he is one of the family owners to stepped in after they got rid of their last guy.

Kjeld Kirk Kristiansen took the helm of LEGO early in 2004 after the company let go its former Executive Vice President and COO, Poul Plougmann, and focused on bringing the company back to its roots. Last year, LEGO lost DKK 1.4 billion, which prompted some serious reorganization, including job cuts of up to 1,000 positions. Mr. Kristiansen is the grandson of LEGO founder Ole Kirk Christiansen, and has been involved with the company his entire life.

The new guy has been there working with the guy who stepped down, and this was simply a handoff. Part of the restructuring also includes...

"The Company is planning to divest a number of other assets not directly associated with its core business: play materials. No final decision has yet been made on which assets will be sold but it is clear that the LEGOLAND Parks will be transferred to a separate company, wholly or in part under new owners."

Seeing what LEGO creates these days you can understand why their sales have fallen. They are trying to follow fads instead of just make bricks.