While current reports are that Mr. Rogers is receiving treatment for an existing cardiac condition, this no doubt will weigh heavy on the stock on Monday morning as equity markets are never comfortable with uncertainty. The hospitalization of the 75 year old media icon who founded the business bearing his name shouldn’t come as a surprise to shareholders as Ted Rogers has had a number of health issues over the years including a quadruple bypass in 1992.
While few business leaders can have the strategic vision and determination Ted Rogers possessed over the past fifty years the company is well positioned for this change in leadership. The company has been wonderfully managed for years and within the ranks of the Rogers management are a number of individuals who are more than capable of taking over the reins of the company.
My expectation is that Nadir Mohamed will continue to have a pivotal role in the operational guidance of the company from his current position of CEO of the Rogers wireless division and the most likely successor to the interim CEO Alan Horn.
Ted Rogers has expressed a keen interest in keeping control of the company in the hands of the Rogers family with both his son and daughter (Edward & Melinda) occupying executive positions in the company in cable and strategy & development. While Edward may appear to be the likely successor to the position due to his designation of controlling shareholder of the corporate family trust holding control of the A class shares, the board is likely to give the CEO position to Nadir as he possesses both the better track record of corporate responsibility, strategic vision of where the company will go with its wireless division and ability to execute effectively over the long-term.
Despite the loss of any single leader my situational analysis had listed as a significant internal weakness the possibility of Mr. Rogers stepping down. Further analysis prior to buying the stock showed that RCI.B continues to have an extensive resource of highly competent managers to draw upon to fill any gaps in their strategic focus and execution.
The company stands in a strong capital position with a competitive advantage in its wireless operations for the next 2-3 years. It has a balance of revenues from three core operating divisions and its recent third quarter numbers were very impressive. The company has positioned itself well to continue growing revenue streams with tight controls on cost and a clear focus on the business and public consumer for its products and services.
The downside to this situation is the short-term volatility that may exist when the markets factor in the uncertainty of who leads this company forward. If the shares drop substantially on Monday below $30 I will not hesitate to add to my position as I view this company as a high quality long-term investment within my portfolio.
(Disclosure: I hold common shares in RCI.B)