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Navistar names Clarke new CEO; shares surge 28%

Lisle-based Navistar International named Troy A. Clarke as its president chief executive officer Thursday March 7 2013.
File pho| Sun-Times Media

Lisle-based Navistar International named Troy A. Clarke as its president and chief executive officer on Thursday, March 7, 2013. File photo | Sun-Times Media

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Updated: April 9, 2013 11:23AM

Navistar International Corp., hit hard by a bad engine-technology decision, named as its CEO an industry insider who won key investor Carl C. Icahn’s approval. The news came as the Lisle company posted a first-quarter loss that was, nevertheless, a better than expected result.

Shares of the company leaped 27.7 percent, up $6.93 a share, ending the day at $31.89.

The new CEO will be Troy Clarke, Navistar’s president and chief operating officer, who joined Navistar three years ago after a 35-year career at General Motors.

Clarke, 57, succeeds interim CEO Lewis Campbell, a former Textron CEO who replaced ousted CEO Daniel Ustian last August. Campbell had overseen a plan to turn around the company’s high cash burn and costly decision to make its own engine-emissions technology that never met federal standards.

Navistar also split the jobs of CEO and chairman, and named director James Keyes, former chairman of auto parts maker Johnson Controls Inc., as Navistar’s non-executive chairman.

The leadership changes take effect April 15.

Experts said the stock soared because Clarke won insiders’ confidence and because short sellers — prompted to cover their positions after Navistar’s earnings report showed signs the turnaround strategy may be working — staged a rally.

Gimme Credit analyst Vicki Bryan described Clarke as “a truck guy” who is a credible operator and well-connected in both the sales and manufacturing aspects of the trucking business.

Activist investor Icahn, who owns 15 percent of Navistar’s stock and who complained he was not consulted on Campbell’s hiring, issued a statement praising Clarke.

“ In my view, over the past year, Troy Clarke has been the leading force in improving the company’s manufacturing operations and cost structure, thereby proving that he is the right man to lead Navistar,” Icahn said. “The company has a bright future and we are behind Troy 100 percent in his efforts to build Navistar into a focused, competitive and profitable truck and engine manufacturer.”

Morningstar analyst Basili Alukos said nearly half of Navistar’s float was held by short sellers, who make money if the stock goes down in price. The short sellers moved to cover their bets after Navistar’s cash burn slowed more than expected and its first-quarter net loss of $123 million, or $1.53 a share, showed improvement from the year-earlier loss of $153 million, or $2.19 a share.

Campbell also told analysts that he expects Navistar to be profitable by year’s end.

Bryan said she is skeptical that Navistar can right itself quickly.

“They are working without a net,” she said, noting that Navistar still has inadequate liquidity.

“There is a lot of uncertainty,” Bryan said, citing “weak demand and weak pricing and selling into a fully supplied market with competitors selling the same thing.”

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