Qwest’s CEO Steps Down at Board’s Request

Qwest Communications International Inc. Chief Executive Joseph Nacchio resigned, the Wall Street Journal reported, citing unidentified people familiar with the situation.

Nacchio resigned at the request of the company’s directors because of the board’s concern over Qwest’s financial and regulatory troubles, the paper said, citing the unidentified people. The board on Sunday named Richard Notebaert, chief executive of Tellabs Inc., the company’s new chairman and chief executive, the paper said.

In recent months, Nacchio had been losing control of Qwest to company founder and co-chairman Phil Anschutz and to Craig Slater, a board member and an associate of Anschutz, the paper reported, citing people familiar with the matter. The decision to oust Nacchio wasn’t the result of any particular, or new, negative development, the paper said, citing the people.

Nacchio declined to comment, and Notebaert, a former CEO of telecom firm Ameritech before it was acquired by SBC Communications Inc. in 1999, couldn’t be reached to comment, the Journal reported.

Nacchio’s departure from the company he helped to nurture almost from its founding in 1996 comes as the telecommunications industry faces a deepening crisis. Massive construction of new fiber-optic capacity, for which sufficient demand hasn’t materialized, has left companies swimming in debt.

Moreover, Denver-based Qwest, with $26.6 billion in debt, is now being investigated by the Securities and Exchange Commission for its accounting practices.

The company has had steep declines in both its local and long-distance businesses and faces a crisis of investor confidence in the company and its leadership. Qwest’s stock has fallen more than 92% since its high of $57.88 in July 2000.

Increasingly, Nacchio has come under criticism by investors and analysts for the way he has managed Qwest and for cashing out more than $300 million of his personal Qwest holdings even as the company struggled and investors saw the value of their holdings plummet.

Nacchio was informed of the board’s decision to replace him Friday night, according to the Journal.