Friday, November 15, 2002
Michael Capellas ex-CEO of Compaq, officially join WorldCOM as its CEO.
By leaving HP during the first year after the Compaq merger, Capellas has collected more than $16.2 million in payouts. HP said it won't replace Capellas.
"I see this as a great opportunity," Capellas said in a statement. "I look forward to hitting the ground running."
Although Capellas is credited with stabilizing Compaq before it was sold to HP, Capellas will have his work cut out for him.
WorldCom is mired in a $9 billion accounting scandal, a Chapter 11 bankruptcy reorganization and a Securities and Exchange Commission probe.Capellas asserts that he can turn around WorldCom.
"I took this job because I am convinced that WorldCom has the assets, the customers and the people to regain a leadership role in this industry," Capellas said. "In order to do this, we must first regain trust and win respect."
Analysts said that with Capellas at the helm, WorldCom is more likely to retain major customers. "WorldCom has enjoyed relative stability in its large enterprise customer base, despite being in bankruptcy," said Goldman Sachs analyst Frank Governali. "An executive of Capellas' caliber and reputation should please these customers and re-enforce their decisions to stay--as long as service quality doesn't erode."
Governali said the addition of Capellas also improves odds that WorldCom can emerge from bankruptcy intact. Analysts say the company will also be able to compete better with rivals such as Sprint and AT&T because it will have more financial leeway to cut prices profitably.
By: Docmemory
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