Reed Elsevier CEO change

[Liblicense-L Listowner <liblicen@pantheon.yale.edu>]

Breaking news . . .

LONDON (Reuters) - Reed Elsevier's chief executive, Ian Smith, 
has resigned because he was wrong for the times, the publisher 
said on Wednesday, replacing the industry outsider with a proven 
company insider, Erik Engstrom.

Smith, just eight months in the job and known for transforming 
companies, will be replaced immediately by the head of Elsevier, 
the company's scientific-publishing division.

Reed Elsevier also said 2010 operating margins would likely fall 
slightly, due to a weak revenue environment combined with 
increased investment, particularly in U.S. legal markets.
Its shares were down about 6 percent in a 1 percent lower 
European media sector, as investors worried that the company may 
have lost its way after being seen as a safe bet for a decade 
when led by Crispin Davis, Smith's predecessor.

"Ian and the board decided it wasn't the right role for him in 
the current economic circumstances. Erik has proven sectoral 
experience. There is no disagreement on strategy," a spokesman 
for the Anglo-Dutch company said.

Smith, 55, who divided investor opinion with an August rights 
issue and ambitious investment plans, was not available for 
comment.

Dutch brokerage Petercam cut its recommendation to 'hold' from 
'buy' on the margin forecast, although other analysts said they 
were unsurprised by the guidance.

"The new CEO will likely have solid backing but first will have 
to calm the unrest and prepare the company for renewed growth 
after 2010," Petercam said in a note.

MEDIA EXPERIENCE

Engstrom, a 46-year-old Swede who rarely speaks in public, has 
been chief executive of Elsevier -- the group's least cyclical 
and most profitable division -- for five years.

He previously worked at private equity firm General Atlantic 
Partners and book publisher Random House, and was a director of 
Swedish paper-products firm SCA.

Reed Elsevier chairman Anthony Habgood said Engstrom was "well 
suited to lead Reed Elsevier, to create value for our 
shareholders and to deliver growth as economic conditions 
improve." Habgood has been chairman since June.

Smith was chosen over internal candidates to succeed the stiff 
upper-lipped Davis late last year. He had held senior roles at 
Royal Dutch Shell and General Healthcare Group, and was briefly 
CEO of Taylor Woodrow.

His role in guiding builder Taylor Woodrow through a merger with 
George Wimpey, and his previous experience as a management 
consultant, fuelled hopes when he was appointed that he might 
lead the takeover of a rival.

Giasone Salati, analyst at brokerage Execution, said: "Ian 
Smith's strategy of investing 'tens of millions' to restore was a 
radical change from the previous policy of margin expansion.
"He is also known for radical solutions, and the appointment of 
an internal successor might suggest that the board would not 
support a transformational deal."

Smith had made a strong case for accelerating investment, 
particularly in the U.S. legal market, where Reed has been losing 
market share to Thomson Reuters.

In July, he said: "Despite the global recession, I believe that 
now is the right time to develop more aggressive market and 
product strategies to capture the market opportunities and 
increase competitive differentiation."

Reed said on Wednesday first-half trends had continued as 
expected in the second half, with advertising and promotion 
markets and employee screening remaining difficult but likely to 
stabilise as comparatives get easier.

"The major professional markets, accounting for the majority of 
Reed Elsevier's business, are proving more resilient than most 
but not immune from late cycle pressures given the subscription 
nature of much of the revenue," it said.