Tesla Appoints New Leader To Tame Musk.
Exciting Profit Was Not Quite What It Seemed.
“Denholm is also going to have to stand up to Musk more often than the board on which she sat had done thus far”
Tesla Inc appointed a new chairman to oversee volatile CEO Elon Musk, while new financial data showed that the impressive profits announced for the third quarter weren’t quite what they seemed.
Musk’s recent run-in with the Securities and Exchange Commission over botched plans to go private led to big fines and an agreement with the SEC to rein-in Musk.
Reuters Breaking Views put it this way.
“Elon Musk is finally getting his adult supervision. Robyn Denholm, finance chief at Australian telecom operator Telstra, will move from her boardroom seat at Tesla to the head of the table and oversee the $60 billion electric-car maker’s erratic chief executive full-time,” Breaking Views columnist Richard Beales said.
Last month Tesla surprised and impressed investors with news of a surprise profit in the 3rd quarter.
Tesla reported net income of $312 million in the 3rd quarter, the equivalent of $1.75 a share, compared with a loss in the same period last year of $3.70 a share. Sales jumped nearly 130% to $6.8 billion.
It turns out the numbers left out some important facts.
In a quarterly information filing, Tesla said it had booked $189.5 million in automotive regulatory credits during the third quarter. The 3rd quarter statement had only disclosed $52 million in zero emissions vehicle credits. The new disclosure showed that 44% of the net profit claimed in the quarter was attributed to previously undisclosed regulatory credits.
Tesla’s stock price didn’t react to the news.
Investment researcher Evercore ISI liked the Denholm appointment.
“Denholm is a seasoned executive and was recently appointed CFO of Telstra, having been COO since January 2017. Prior to Telstra, Denholm was CFO and COO of Juniper Networks and has previously worked at Sun, Toyota and Arthur Anderson. She knows Tesla well, having been on the board since 2014. We therefore presume that she is well acquainted with Musk and his vision and should be in a position to build a strong relationship with the CEO going forward,” Evercore ISI analyst George Galliers said.
Breaking Views’ Beales had some cautionary words.
“Musk says he is looking forward to working with his new boss. A chair and a CEO should ideally be in sync. But to provide the checks and balances the SEC and investors clearly want, Denholm is also going to have to stand up to Musk more often than the board on which she sat had done thus far,” Beales said.