A few hours after it pledged to overhaul its business plan to compensate for
network outages and dismal sales, ICG
Communications Inc. accepted the resignations from three key executives.
Quitting without explanation were Chief Executive Officer and Chairman Carl
E. Vogel and fellow board members Gary S. Howard and Thomas O. Hicks, the
firm announced in a statement issued Tuesday.
What makes the moves even more interesting is that Vogel, Howard and Hicks
had been in their positions less than a month before stepping down. Vogel
had taken over for J. Shelby Bryan as the skipper while Howard, executive
vice president and chief operating officer of Liberty Media Corp. and Hicks,
chairman and CEO of Hicks, Muse, Tate & Furst Inc., had joined as consuls.
Clearly the three could not see the ramifications of serious network
outages, announced by Bloomberg News only days prior to their joining
ICG in those capacities.
The troubled firm said the following in a press statement Monday:
“ICG has experienced significant customer service issues within certain
segments of its Internet Remote Access Service, business that represents a
significant portion of its revenues. These issues have involved, among other
things, network outages, equipment failures and technical difficulties.”
The result is that major customers said they would withdraw as ICG
clientele, or at the least, slow their service orders, if the turmoil was
not resolved.
Hence ICG’s revised business plan, announced Monday. It calls for controlled
expansion, quality of service enhancements and cost
savings. The firm previously had anticipated net line additions of
approximately 470,000 lines in the third and fourth quarters of 2000 and
approximately 1,000,000 lines in 2001. The revised business plan provides
for net line additions of approximately 125,000 lines during the second half
of 2000 and approximately 500,000 to 600,000 lines for the year 2001.
ICG had anticipated revenues of more than $400 million and approximately $60
million of EBITDA for the third and fourth quarters of 2000. The revised
estimates are for approximately $300 million of revenues and negative EBITDA
of approximately $25 million during the same period.
ICG Communications spokesperson Kate Varden said the firm was not commenting on the latest developments Tuesday afternoon.
Pat McGrew, of e-consulting firm McGrew + McDaniel Group Inc., said
the situation looks like a lot of similar situations in the industry, where over expansion in a chaotic manner has lead to quality of service issues.
“Executives are turning over in a lot of service providers because they did not realize the vast issues of over expansion,” McGrew said. “They saw the contracts and the cash and not the investment required to maintain them.
“Any executive who steps into a job without performing their own due diligence (talk to some happy customers, talk to some unhappy customers, talk to tech support staff) gets what they get in the revolving door of
high tech companies!”
Indeed, the stock plunged 58 percent Monday when investors got wind of the
revised business plan statement. The stock has fallen 91 percent this year.
William S. Beans, Jr., will continue as president and COO of the company.
Beans will be responsible for the day-to-day operations of the company and
will report to what’s left of the executive committee of the board of
directors.
The firm is also seeking a lifeline of funding and said its revised business
plan places it at risk of defaulting on certain obligations under a $200
million bank loan unless it obtains waivers.
