ValueVision board is lambasted

The board of directors, which is supposed to look after shareholder interests, was in the hot seat Monday at turmoil-ridden ValueVision Media Inc., as some of the company's biggest investors called for the board to be fired and the company put on the auction block.

In a conference call peppered with pointed questions and harsh comments, some of the company's biggest investors pushed for answers about why the company on Friday fired CEO Rene Aiu and three of her top executives after just five months on the job. They also questioned whether board chair John Buck, who was named CEO Friday, was competent to lead the company and its luxury TV shopping network ShopNBC to profitability.

"It's a shame that you're not hiring an outside investment banker to put the company up for sale, and, frankly, that you and the board feel that you still have a right to shepherd the company forward," said Deborah Fine of Fine Capital, ValueVision's second-largest shareholder with a 9-percent stake. ValueVision announced Friday that it needed "a different kind of leadership and vision," after reporting that second-quarter losses tripled and quarterly sales plunged 26 percent.

It was the third CEO change since October, when William Lansing, a former NBC Internet and Fingerhut executive, was shown the door after 3 1/2 years. Buck took over briefly as interim-CEO before hiring Aiu in March.

Jamie Lester of Soundpost Partners, the No. 3 owner with a 7 percent share, said the company has "done nothing but spend shareholders' assets," and that "100 percent of shareholders" were frustrated with the company.

While Buck and new President and Chief Operating Officer Keith Stewart, who spent 15 years at home-shopping leader QVC, spoke confidently -- and in vague terms -- of regaining control of the business and moving forward, Lester pushed for specific numbers.

"Anything that gives shareholders a sense that you, frankly, have an idea what you're doing with the business," Lester pressed. "And if not, and you don't know what you're doing with the business, then how can you justify keeping on operating and burning cash?"

Aaronson, who still owns 100,000 shares, said executives were throwing away the company's legacy.

"I love the company," he said. "But it kills me because I still believe we had all the right things going for us. We had all the smart ideas. I don't know how we screwed it up so well."

He called for an accounting of how much money the company spent on executive searches, moving expenses, termination pay, bonuses and equity compensation on what he called the "revolving door" of leadership.

ShopNBC has not made a profit since 2001, a point not lost on Aaronson. The stock, which traded at $57 in 1999, closed Monday at $2.36.

"I ain't happy with holding all the stock I do when it's under 3 bucks a share, and all I'm dealing with the hopes and promises and a brighter future," Aaronson said. "I want the future now. If we can't do it, then let's sell the company."

Bob Evans, an analyst with Craig Hallum Capital Group in Minneapolis, said it's rare for investors to be this outspoken on a conference call. "But it happens in situations where you have two CEO dismissals in a year and the stock is trading at its cash value," he said.

In an interview after the call, Buck said that he wasn't surprised by the frustrations.

"Our shareholders are upset and they're angry," he said. "They have a right to be."

Buck said the board has discussed hiring an investment banker, "but we haven't made that decision."

He said ValueVision will regain investors' trust when it shores up the bottom line, which Buck optimistically declares is fixable even though retailers are girding against some of the strongest consumer headwinds in decades.

"We learned from the past," he said. "We're moving forward, and there are better days ahead."