Global Crossing to Lose Its 2nd CEO This Year
Global Crossing Ltd. today is expected to announce the resignation of Chief Executive Leo J. Hindery Jr., who becomes the second CEO to leave the upstart telecommunications firm in less than a year.
The unexpected departure of Hindery, a 15-year veteran who brought a mix of deal-making and communications industry expertise to the young company, is likely to further rattle beleaguered investors in Global Crossing.
Shares of the Bermuda-based company have been pummeled this year on Wall Street, which has lost its enthusiasm for telecommunications companies amid concerns over AT&T; Corp.’s future amd signs of slower growth industrywide.
After reaching a 52-week high of $61.81 in February, Global Crossing’s stock has lost almost two-thirds of its value.
It closed Tuesday at $23.88, down $2.12, or more than 8%, in Nasdaq trading.
Last week, an affiliated company, Asia Global Crossing, raised $476 million in an initial public offering of stock. The offering price was reduced twice because of waning investor interest.
Global Crossing, which has executive offices in Beverly Hills, has been growing rapidly, fueled in part by a string of acquisitions. The company bought long-distance provider Frontier Communications as well as the British telecommunications firm Racal.
Last year, the company booked sharply higher sales of $1.66 billion, but lost $71 million as it invested heavily to finish building its worldwide fiber-optic communications network.
A source described the executive shuffle as a mutual decision, but a company spokesman declined to comment on reports of Hindery’s replacement.
Thomas Casey, vice chairman of Global Crossing, will be named chief executive effective immediately, according to the source.
Casey, a close associate of Global Crossing Chairman Gary Winnick, currently doubles as the president of Pacific Capital Group, a private investment company owned by Winnick.
Casey would become the fifth CEO hired by Winnick in fewer than four years. Winnick founded Global Crossing in early 1997 and remains the largest shareholder and a dominant figure at the firm.
Hindery’s resignation comes seven months after the departure of the former chief executive, Robert Annunziata, who held the position for less than a year before leaving with a stock-laden severance package worth an estimated $160 million.
The value of his stock has since dropped precipitously.
Hindery was awarded stock options for Global Crossing shares, but they are essentially worthless because the purchase price is well above the market value of the shares.
Hindery, 52, earned his reputation as a deal maker from his years at the helm of cable giant Tele-Communications Inc.
When AT&T; purchased the cable company in 1999, Hindery stayed on as president and chief executive of AT&T;’s broadband unit. He left in November to join Global Crossing’s GlobalCenter unit, which provides Web-hosting and other Internet services for major corporations.
Hindery will remain with GlobalCenter until the completion of that unit’s sale to rival Exodus Communications for $6 billion in stock.
Hindery also holds options for an estimated 5% ownership stake in the GlobalCenter unit, which will convert into a potential profit of more than $200 million when the deal with Exodus is completed.
In the last year, several other executives have left Global Crossing, thinning out what was an top-heavy management team.
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Global’s Reach
To remain competitive in the retail-software market, MSS Global:
* Tests all retail upgrades in the three Goodwin family stores to catch system
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* Keeps abreast of leading-edge retail technology.
