Some bad news for Qwest; Dick Notebart is retiring.
Qwest Chief Executive to Retire
By MATT RICHTEL
Published: June 12, 2007
Richard C. Notebaert, who is credited with bringing Qwest Communications back from the brink of bankruptcy and an accounting scandal, surprised investors today by announcing he plans to resign as chief executive and chairman.
Mr. Notebaert, who took the helm of Qwest in 2002 when it faced difficult legal and competitive challenges, said he is leaving in order to spend more time with his family and to focus on other interests. He will stay until a replacement is named, the company said.
The announcement surprised industry analysts who have given Mr. Notebaert credit from steering Qwest, the smallest of the regional telephone companies, back to stability.
Mr. Notebaert’s resignation, however, follows closely the resignations of two other top Qwest executives: Oren G. Shaffer, chief financial officer, who left April 1, and Barry Allen, chief operations officer, who announced his retirement earlier this month.
The departure of the key executives “suggests turmoil is coming,” said Donna Jaegers, an industry analyst with Janco Partners who has a sell rating on the stock. Qwest’s shares closed the day at $9.36, down nearly 8 percent. In the last few years, the shares have risen steadily, from less than $4 three years ago.
Mr. Notebaert and his team deserve credit for cutting the companies costs and bringing it order, Ms. Jaegers said, but the company still faces major strategic challenges. In particular, she said, Denver-based Qwest must find a way to compete more effectively in the long-distance phone and data market outside of its core 14-state market.
Bob Toevs, a spokesman for Qwest, said the company has replacements already for Mr. Allen and Mr. Shaffer and that it is well equipped to deal with a transition. “We’ve got a talented bench and strong senior management,” the spokesman said.
Mr. Notebaert replaced Joseph P. Nacchio as chairman and chief executive. Mr. Nacchio was convicted in April of insider trading. Under Mr. Notebaert, Qwest made an aggressive attempt in 2005 to become a bigger player in the long-distance corporate market by bidding to buy MCI. But Qwest was ultimately outbid by rival Verizon Communications.
The company also has put enormous emphasis on customer service, which Mr. Notebaert constantly stresses, and has turned around some of the poor customer reviews that once saddled it. The company also has largely put behind it the fallout from an accounting scandal that forced it to restate earnings for 2000 and 2001, during which it had understated losses by $2.54 billion.
Mr. Notebaert said in a conference call with investors today that he was proud of the last five years and that he felt the team of executives had re-established Qwest’s “integrity, liquidity and profitability.”
Now, he said, “profitability is a consistent thing for us.”
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