DENVER—Richard Notebaert, who pulled a troubled Qwest Communications from the brink of bankruptcy amid a multibillion-dollar accounting scandal, announced plans Monday to retire as chairman and chief executive officer. Qwest shares fell 8 percent Monday.
Notebaert, 59, said he will leave the Denver-based telecommunications company after the board of directors selects a replacement, although no timetable has been established. He is the third top-ranking executive to announce plans to leave Qwest this year.
“The time has come for me to spend more time with family and focus on other commitments,” Notebaert said in a written statement.
Addressing a conference in New York later Monday, Notebaert said, “I would not walk away if I didn’t feel the legacy that I left behind was very strong and that the platform that we put in place was one that share owners could continue to benefit and be rewarded by participating in.”
He said the company is profitable and added, “I expect that to continue to improve. And so I feel very good about where we are—very good about it.”
Notebaert was tapped to head Qwest Communications International Inc., the main telephone service provider in 14 mostly Western states, after ex-CEO Joe Nacchio resigned in June 2002 amid the scandal that forced the company to restate at least $2.2 billion in revenue.
In the past five years, Notebaert and his team toiled to turn the company around and drew intense national interest with a bitter bidding war for MCI Inc. that eventually was won by Verizon Communications Inc.
Last year, Qwest posted its first operating profit since acquiring the former Baby Bell U S West Inc. in 2000.
Notebaert’s planned departure comes as Qwest is finding its way in the aggressively competitive field of telephone, Internet and television service. It resells both wireless and satellite television services to offer bundled packages to customers.
One of its toughest competitors is Comcast Corp., which covers a good portion of Qwest’s 14-state region.
Notebaert helped cut the company’s costs and increased revenue without forcing it into bankruptcy, Janco Partners telecommunications analyst Donna Jaegers said.
“He did a good job but this is not a good time to step down,” she said. “Unfortunately, Qwest is at a very strategic juncture where they have to start getting better returns out of their out-of-region business.”
The board faces a difficult task in finding a replacement, Jaegers said.
“They need someone who can realize the culture of being in a Bell company with that kind of mind-set but also lead that people forward into a much more competitive environment,” she said.
Notebaert’s decision comes on the heels of the departures of two other high-ranking executives, and caught many off-guard, including the Communications Workers of America, Qwest’s largest union. Its next contract talks with Qwest are scheduled next year.
“I’m shocked,” said Annie Hill, vice president of CWA’s District 7. “While I don’t always agree with all the day-to-day decisions, boy, they (the three executives) have really pulled this company out from a real problem area.”
Oren G. Shaffer, vice chairman and chief financial officer resigned effective April 1 and was replaced by John W. Richardson, then Qwest’s controller and senior vice president of finance.
Last week, Barry K. Allen, executive vice president of operations, said he will retire effective June 29 and will be replaced by Robert D. Tregemba, a vice president of network operations and engineering.
The three were the core executives who helped turn Qwest around, Qwest spokesman Nick Sweers said.
Notebaert joined Qwest as chairman and CEO in June 2002 after Nacchio resigned under pressure. Nacchio was convicted in April of 19 counts of insider trading and is scheduled to be sentenced July 27. He has said he will appeal.
Notebaert’s appointment came as Securities and Exchange Commission regulators were looking into potential wrongdoing stemming from the revenue restatement.
The SEC later charged the company and key one-time Qwest executives, including Nacchio, with orchestrating a financial fraud at the company between April 1999 and March 2002.
Regulators alleged Qwest improperly reported approximately $3 billion in revenue that helped pave the way for its 2000 acquisition of U S West. Qwest paid $250 million to settle SEC charges of fraud but did not admit wrongdoing.
In addition to Nacchio, the remaining defendants in the SEC case include former Qwest President Afshin Mohebbi; former Chief Financial Officer Robert Woodruff; and former Qwest accountants James Kozlowski and Frank T. Noyes.
Former CFO Robin Szeliga and former Qwest executive Gregory Casey have reached separate settlements with the SEC.
Before joining Qwest, Notebaert was president and chief executive of Tellabs, a communications equipment provider, and spent 30 years with Ameritech Corp. in a variety of executive positions, including chairman and CEO.
Frank P. Popoff, lead director on the Qwest board, said Notebaert had “exceeded all expectations. He will leave the company well positioned for future growth and truly will be missed.”
Qwest shares fell 81 cents, or 8 percent, to $9.36 Monday.
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