Cable & Wireless switches chiefs
Published: 02 Apr 2003 17:58 BST
The chief executive responsible for issuing four profit warnings and cutting thousands of staff at troubled telecom group Cable & Wireless is to leave the company on 4 April. The company's share price rose nearly 8 percent after news of Graham Wallace's departure.
Wallace is to be replaced by Francesco Caio, founder of Netscalibur and is previously chief executive officer of Italian mobile company Omnitel and Merloni. Also appointed to the Cable & Wireless board is Kevin Loosemore, formerly chief executive officer of IBM UK, as regional president for EMEA of Motorola.
The new management structure is aimed at putting C&W back into profitablity following a series of disasters with Wallace at the helm against a background of angry shareholder pressure urging him to step down.
One area likely to be addressed is the datacentre business. In an attempt to make its global datacentres profitable, the global group cut its datacentres from 42 to 23 last November. Utilisation rates of the centres were running at about 30 percent, below the 35 to 40 percent level needed for profitability.
There are currently three C&W datacentres in the UK, with the largest at Swindon, one in the Docklands, London, and one at Park Royal in West London. Their fate will be announced at the Annual Results meeting in June. A spokesman told ZDNet UK that "defining the direction of the company is the (new) chief executive's job, and he will base it on analysis work that has been done over the last few months." The worldwide workforce is currently 25,000 with 6,000 in the UK.
During his period at Cable & Wireless, Wallace issued four profit warnings over two years and saw the value of C&W shares fall by 90 percent from a peak of £15 in March 2000, forcing it out of the FTSE 100 Index. In November 2002 the company cut 3,500 jobs from its loss-making global division. Around £5bn was spent on what are now almost worthless Internet ventures, mainly in the US. The £800m restructuring operation cost the company two-third of its cash reserves.
The new chief executive officer, Caio, will receive a base salary of £700,000 per annum with a maximum annual bonus of up to 150 percent of salary. In the first year he will be guaranteed a minimum bonus payment of £375,000 (54 percent).
Richard Lapthorne, chairman of Cable & Wireless, said: "Francesco will focus on our customers and other key relationships around the world, as well as on the development and execution of strategy to meet those customers' needs. Kevin will take day-to-day operational responsibility for the management of our businesses."
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