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March 9, 2004

Cochlear silent as US chief quits

From: Sydney Morning Herald - Sydney,New South Wales,Australia - Mar 9, 2004

By Jan Eakin

The head of Cochlear's North American operations, Jim Miller, has resigned just five weeks into Chris Roberts' rein as chief executive of the ear implant developer.

Although Cochlear confirmed Mr Miller's departure, after three years with the company, no announcement was made to the Australian Stock Exchange despite the US being Cochlear's biggest market with 50 per cent of sales in the last financial year.

It is understood that Mr Miller, who was appointed by Mr Roberts' predecessor, Jack O'Mahony, has been considering his position for some time. He has been talking to Cochlear's main rival, Advanced Bionics. It is not clear if he has taken up a position at Advanced, with a non-compete clause believed to have been part of his Cochlear contract.

With Mr Roberts in the US, chief financial officer, Neville Mitchell, said yesterday that the company was looking for a successor.

Mr Miller was in charge of the region throughout last year's meningitis scare when Cochlear initially benefited significantly from the withdrawal of Advanced Bionics from the market only to lose the advantage back to Advanced over the following few months.

Last month Cochlear's share price fell after the group posted an interim net profit of $26.9 million. The result followed two profit warnings last year as sales growth stalled.

Analysts were surprised at the absence of an official announcement on the resignation.

It was generally agreed the timing of the departure was bad for the company given there was no obvious successor.

But one analyst suggested that over the longer term Mr Miller's departure would be "no great loss" and that such changes at the operational level could be what the company needs.

"A replacement is yet to be announced, however the role calls for someone having a strong medical devices sales and marketing background," said Lucy Dwyer of Credit Suisse First Boston.

"If Chris Roberts wants to be viewed as a change agent, this is certainly the way to do it - not being content to watch US market share being eroded by a competitor product launch in the first half of fiscal 2004. Being very much a consumer-driven market, it is vitally important to be an aggressive marketer in the US, particularly given the marketing voracity of competitor Advanced Bionics."

Another analyst, who preferred not to be named, said: "Miller was well respected in the industry and credited with improving marketing. However, he failed to consolidate Cochlear's gains after Advanced's disastrous meningitis withdrawal in 2002.

"We believe there is some depth to Cochlear USA but it puts considerable emphasis back on management at a time of weakness. The second half will be that more challenging without Miller."

Copyright © 2004. The Sydney Morning Herald.