Skullcandy shares jump on new CEO announcement

Skullcandy's shares rise on appointment of Nike executive as new CEO

Associated Press

Skullcandy Inc.'s shares jumped Tuesday after the headphone maker announced that it has appointed a new chief executive.

THE SPARK: The Park City, Utah, company said late Monday that it has hired Nike executive Hoby Darling as its president and CEO. Darling was the general manager for Nike Inc.'s Nike+ digital sport unit.

THE BIG PICTURE: Skullcandy's prior leader, Jeremy Andrus, stepped down as president and CEO in February to join a private investment firm. The company's founder and director Rick Alden became interim CEO. Skullcandy said Monday that its board wanted to move quickly to address the company's needs for a permanent CEO.

The company makes headphones and decorative iPod cases and T-shirts, all emblazoned with a skull logo. Its products are sold in electronics, sporting goods and mobile phone stores, as well as online and through mass retailers like Target and Best Buy. Like other personal electronics and accessories makers, Skullcandy has had to deal with increasing competition and the changing preferences of finicky consumers.

THE ANALYSIS: Jefferies analyst Randal Konik said he believes this latest appointment should help the company move forward as it repositions itself for future growth.

The analyst also said that he likes that founder Rick Alden will continue working full time at the company, as it helps solidify the management team and is a step in the right direction for Skullcandy.

Despite the positive development, Konik said he remain cautious about Skullcandy's potential. He recently downgraded his rating on the company to "Underperform" due to mounting concerns around promotional pressures and rising competition in the headphone market, which he says continue to be a challenge for Skullcandy. The analyst has a target price of $5 on the stock.

SHARE ACTION: Shares gained 31 cents, or nearly 6 percent, to $5.64 in midday trading. Its stock has lost more than 65 percent of its value since August. The company went public less than two years ago at $20 per share.

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