Qwest CEO Shown The Door

The board of directors at cash-strapped Qwest Communications has fired CEO Joseph Nacchio and named former Ameritech chief Richard Notebaert as his replacement.

by Ryan Naraine of internetnews.com [June 19, 2002]

The ousting of Nacchio brings an end to topsy-turvy years at Qwest Communications, a tenure that included the transformation of the Colorado firm from a broadband fiber-optic data center into a legitimate contender in the phone service industry.

Qwest, which provides Internet, data, multimedia, and voice services over a broadband fiber-optic network, is also facing an investigation by the Securities and Exchange Commission (SEC) over accounting procedures.

In a brief statement Monday, Qwest announced the CEO switch and said Nacchio would serve as a consultant for up to two years, "to assist in transition, strategy, planning and other matters of importance to the company."

"When Joe Nacchio came on board in 1997, Qwest was a very different company. We had a foundation, but needed a leader to bring technology and a vision to life and grow Qwest into a full-service communications company...Joe Nacchio did that and more—he brought a renewed focus on customer service and prepared us for re-entry into the long-distance business," the company said.

It is the second high-profile CEO exit among big name telcos, following the departure of WorldCom boss Bernard Ebbers a month ago.

Qwest also announced the resignation of Philip Anschutz as non-executive chairman of the board. Anschutz remains a director and chairman of the executive committee of the board.

Notebaert joins Qwest from Ameritech, where he served as chairman and CEO of the regional Bell company in five Midwestern states.

Nacchio spent his final days at Qwest trying to convince shareholders that the sale of the carrier's directory service would reap $8 billion to $10 billion.

He was also manning the ship through another SEC investigation that Qwest bought competitors' silence on regulatory matters through secret deals for access to its local phone network.

Reports say state regulators are probing whether the Qwest gave some carriers better terms of use in its 14-state area in exchange for support of Qwest's plans to add to its long-distance business. Qwest denied it did anything wrong, and has tried to head off state investigations by asking the FCC to issue a ruling.

In addition to investigations in Arizona, New Mexico, Oregon, and Utah, Qwest faces up to $200 million in fines in Minnesota after a yearlong investigation by that state's Department of Commerce.

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