[earnings' out]Nextel Names Tim Donahue CEO as Daniel Akerson Takes New Job
Bloomberg News
July 14, 1999, 9:02 p.m. PT
Nextel Names Tim Donahue CEO as Daniel Akerson Takes New Job
Reston, Virginia, July 15 (Bloomberg) -- Nextel
Communications Inc., a nationwide wireless phone services
provider, named Tim Donahue chief executive as Chairman Daniel
Akerson moves to work for top Nextel shareholder Craig McCaw.
Nextel also announced its second-quarter loss, including
payment of preferred dividends, narrowed to $315 million, or
$1.04 a share, from $531.3 million, or $1.94 a share, a year
earlier, including a one-time charge and payment of preferred
dividends. The Reston, Virginia-based company was expected to
lose $1.35 a share, the average estimate of analysts polled by
First Call Corp.
The chief executive change comes two months after MCI
WorldCom Inc., the No. 2 long-distance phone company, decided
against buying Nextel for about $16.9 billion. Analysts said MCI
WorldCom needs a wireless offering to compete against AT&T Corp.
and Sprint Corp., which have national wireless divisions.
Donahue, who also is Nextel president, said he will focus on
building Nextel as an independent company.
Akerson, who had been Nextel's chief executive, will take a
position in August at Eagle River Investments LLC, a private
investment company headed by McCaw.
Nextel said Akerson will remain as chairman until the end of
the year, when McCaw, who owns 20 percent of Nextel, is expected
to assume the post.
''Tim was a pioneer in bringing data applications to the
wireless world and is uniquely qualified to lead Nextel in this
rapidly expanding market,'' Akerson said in a news release.
Business Focus
Under Donahue, Nextel will concentrate on providing wireless
services to business customers, who tend to use their phones more
often than consumers.
''We'll remain almost maniacally focused on business
customers,'' said Donahue.
Donahue said the company has also discussed providing
services to consumers. If and when that happens, Nextel won't
just provide cellular services, he said. He declined to be more
specific.
Donahue said he will focus on the reliability of Nextel's
network as wireless traffic surges. Some wireless networks are
running out of capacity.
Nextel will also focus on providing data services. The
company will start selling a new data product in the first
quarter of next year.
Nextel is also in talks with wireless equipment makers, said
Donahue. He declined to name them or give a timetable for an
agreement. Motorola, Inc., the No. 2 maker of cellular phones, is
the sole provider of equipment to Nextel.
Donahue said the company is not in talks for any merger or
alliance. He believes the company can stay independent and be
successful.
''We can go head-to-head with anybody,'' Donahue said.
Second-Quarter Earnings
Nextel said operating revenue rose 88 percent to
$793.1 million from $421.4 million a year earlier, because of a
record 440,000 domestic digital-subscriber additions. The company
had 3.6 million subscribers at the end of the quarter, a 76
percent increase from June 30, 1998.
The results put the company on track to exceed its 1999
growth targets, Steve Shindler, Nextel chief financial officer,
said in a statement.
Nextel's average monthly customer bill rose to about $74, a
$3 increase from the first quarter and a $5 increase from a year
earlier.
Operating cash flow, or earnings before interest,
depreciation, taxes and amortization, rose to $108.9 million,
from $35.8 million in the first quarter.
Akerson, a former MCI Communications Corp. president, joined
Nextel in March 1996. The company's stock was at 16 3/8 the day
before his appointment. It closed at 52 11/16 yesterday.
Akerson will continue as a member of Nextel's board and its
operations committee after he steps down as chairman. He will
become co-chairman and an investor in Eagle River, a company that
oversees McCaw's investments in communications companies.
Donahue joined Nextel in February 1996 from AT&T Wireless
Services.
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