In July of 1996, Sunbeam Corporation hired Albert J. Dunlap as their new CEO and Chairman of the Board. He was known for his cost and staff cutting techniques and therefore acquired the nickname of "Chainsaw Al". Sunbeam's Board of Directors hoped that Dunlap's strict and unusual techniques could turn-around the company to make it a desirable acquisition target. Dunlap also brought his trusted CFO, Russell A. Kersh, along with him to Sunbeam. .
What Dunlap Brought to to Sunbeam Corporation .
Due to his professional and understanding of the company's needs, Dunlap was able to produce immediate results for Sunbeam Corporation. The value of stock increased by 60% to $18.63. Dunlap also planned to eliminate half of the staff and 87% of products in 1997. In March of 1998 Sunbeam purchased Coleman stoves, Mr. Coffee, and First Alert smoke detectors for $2.5 billion. The purchase of these companies was later revealed to be part of an elaborate accounting scheme by Dunlap and Kersh to inflate the overall value of the company's profits. .
An internal auditor named Deidra DenDanto had challenged Dunlap's practices from the beginning with no support from her superiors. She wrote a letter to the board revealing Dunlap's practices and later resigned on April 3, 1998. Andrew Shore was a stock analyst with Paine Weber, Inc. and began to take note of the high of inventory and accounts receivable in early 1997. He also learned that 2 senior officers had recently left the company. Rich Goudis, the Chief of Investor Relations, had resigned and Donald Uzzi, the Executive Vice President of Worldwide Consumer Products was fired. As a result, Andrew Shore downgraded the rating of Sunbeam stock and price fell by 25%. .
During this time, stories began to be published about potential accounting manipulations at Sunbeam. The board met on June 13, 1998 and later in the day fired Dunlap and Kersh for the accounting manipulations.