Hawaiian Telcom CEO faces tough questions
CEO Stephen Cooper says the company is financially healthy
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Investor and analysts grilled Hawaiian Telcom's new chief executive officer yesterday about everything from his background with troubled corporations to his plans for the local telephone company after taking over on Monday.
Investors and analysts shared their concerns in a conference call about the company's abrupt change in leadership earlier this week, when the company ousted former Chief Executive Officer Michael Ruley, who had lead the company since October 2004.
Stephen Cooper, Hawaiian Telcom's new chief executive, said during the next month and a half he will put specific measures in place to tackle customer-service and other problems that have plagued the company for nearly two years.
Hawaiian Telcom is in the midst of reorganization efforts that have resulted in the cuts of more than 100 positions since early last year, including more than 50 managers laid off last month.
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Hawaiian Telcom's senior executives got an earful from investors and analysts yesterday who shared their concerns about the company's abrupt change in leadership earlier this week.
Stephen Cooper, Hawaiian Telcom's new chief executive, faced tough questions about the future of the troubled isle telephone and Internet services company in a conference call held just two days after it ousted former Chief Executive Officer Michael Ruley, who had lead the company since October 2004.
Local investors and mainland analysts grilled Cooper and Chief Financial Officer Paul Sunu on everything from fraud rumors to financial guidance, which the executives repeatedly refused to discuss ahead of the fourth-quarter earnings release. The call, scheduled the day before, was cut short after 45 minutes by Cooper, who said he was late to a meeting with his new management team.
"The company somewhere along the way has lost its sharpened focus on the customer, and that -- combined with some operational issues and operational upsets -- has resulted in less-than-optimum performance for the company over the last couple of years," said Cooper, who also serves as the chairman of Kroll Zolfo Cooper, a New York restructuring advisory and interim management company.
Hawaiian Telcom is in the midst of a reorganization that has resulted in the cuts of more than 100 positions since early last year, including more than 50 managers laid off last month. The company lost $29.5 million last quarter as it continued to shed high-speed Internet and land-line phone subscribers. In May, the company posted its first quarterly profit since 2005, when the Carlyle Group of Washington, D.C., acquired the company for $1.6 billion.
"It is not a balance-sheet restructuring," he said. "The balance sheet is strong."
Walter Dods, who heads a team of two dozen groups with more than $30 million invested in Hawaiian Telcom, said the company is not in financial trouble.
"The company needs some operational restructuring, which is what Mr. Cooper and his team has been brought into do," Dods said. "As an investor, I am still very confident that we will meet our goals. It may take a little longer to meet our goals, but we will still meet them."
Cooper said yesterday he is expanding the company's leadership team from a handful of senior executives to include 40 additional managers "to ensure that we have the right communications and responses from all the various business segments." However, he refused to give a definitive timetable for restructuring milestones that include offering new services such as video and faster Internet service.
"Hopefully we will be well on our way, by way of initiating programs to accomplish three or four or five priorities within 30 or 45 days," he said in response to a question from David Sharret, an analyst with Lehman Brothers Inc. in New York.
Patrick Dyson, a New York-based analyst with Credit Suisse Group, asked what attracted Cooper, who has limited telecom experience, to the position.
"In the last day, the real concern has been you've come from a couple of high-profile situations such as Enron and Krispy Kreme, and people are really worried about (whether there are) other things going on at Hawaiian Telcom -- is there fraud involved? That's been thrown around," Dyson said.
Cooper declined to address concerns about "fraud or some other spooky issue going on" and said he took the position primarily because of a long relationship with Carlyle Group. He said that company will pay his team a fixed monthly rate plus performance-based bonuses that will be disclosed with the state Public Utilities Commission in the next two weeks.
"Albeit I've been involved from time to time in communications or telecom-related matters, most of my technical expertise in these areas, Pat, is pushing either the little green button or the little red button on my cell phone," he said. "So I am not a telephone guy, but I do look at these situations as focus on organizing, planning, executing and controlling, which I think is kind of inter-business or inter-industry transfer of skills."