AWSJ: Hong Kong's PCCW Looks West For A New CEO
Updated: Monday, May 28, 2001 05:01 PM ET
The hunt by Pacific Century CyberWorks Ltd. for a possible successor to its chief executive, Richard Li, is focusing on North America, where the Hong Kong-based Internet and telephone company has hired search concern Heidrick & Struggles International Inc. to find an experienced telecommunications executive.
Mr. Li already has "very strong" people on his team but ideally "wants a North American player" for the top-level post, said Donna Roche-Tarry, a senior telecommunications partner and managing director of the Greenwich, Connecticut, office of Heidrick & Struggles. The search quietly got under way in February, but the name of the recruiter hasn't been publicly disclosed.
The emphasis of the search suggests that PCCW, whose top management is currently loaded with finance-industry executives, is betting that the addition of a telecom-industry veteran can help turn around its dismal share price and integrate its recent string of acquisitions. The price of PCCW's shares closed slightly lower in Hong Kong at HK$2.68 (34.4 U.S. cents) each Monday, down more than 90% from its high early last year.
For a star executive with the right skills, Mr. Li "will step aside" as chief executive officer, while remaining in his role as executive chairman, Ms. Roche-Tarry said.
Mr. Li is flexible about titles for a newcomer - "president" is one possibility. While the focus is on North American executives, European candidates are also possible, as are internal candidates. But an outside pick seems more likely.
The PCCW boss has attempted to play down the executive search, telling reporters just last week that "there's no urgency to find a CEO."
"I would not even consider finding a replacement CEO until next year's full-year result," which is due to be released early next year, he said. "If I do not find a suitable CEO, I certainly would not be pushing someone into the job."
Ms. Roche-Tarry disclosed that she is considering employed as well as unemployed U.S. telecom executives and that she already has informed Mr. Li of several possible candidates. She declined to identify them. Mr. Li has yet to meet any of the prospective executives, but said "we will get some initial dialogue started" over the next few weeks.
Industry watchers believe PCCW is considering Alex Mandl, who resigned last month as chairman and chief executive of Teligent Inc., the distressed Vienna, Virginia-based telecom company. He startled the business world by giving up his post as AT&T Corp.'s president and chief operating officer to join Teligent in 1996. Last week, Teligent filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
Another possible candidate is Robert E. Knowling Jr., who quit last year as chairman and CEO of Covad Communications Group Inc., a Santa Clara, California, provider of high-speed Internet connections. He previously was an executive vice president of U S West, now part of Qwest Communications International Inc.
PCCW declined to comment further on Monday.
Mr. Li, the 34-year-old son of one of Hong Kong's richest and most powerful men, Li Ka-shing, is PCCW's largest shareholder. The company soared to lofty valuations amid the dot-com boom last year, allowing it to buy the former Hong Kong phone monopoly Cable & Wireless HKT Ltd. with a stock-based US$29 billion bid. But investors have since lost confidence in the company because of weakening prospects for its telecom and Internet businesses. Investors say it will take more than just a big name to revive PCCW's share price.
"You can't just hire a new CEO and expect the share price to start running," said Vincent Cheng, a fund manager at Hamon Asset Management in Hong Kong. "I think it's only significant if whoever comes on board can formulate the strategy of the company for the future. Up to now, they seem a bit confused, to say the least."
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