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Monday, 17 June, 2002, 20:48 GMT 21:48 UK
Qwest chief executive steps down
The man in charge of the troubled US telecoms company Qwest Communications has been replaced.

Qwest, which serves the Northwest and the Rocky Mountains, said Joseph Nacchio resigned voluntarily on Sunday from his positions as chairman and chief executive.

The news sent the firm's share price soaring by 20.5% to $5 on Monday; the stock was the most actively traded of the day on the New York Stock Exchange.

The company's statement came after both The New York Times and The Wall Street Journal claimed its board had asked Mr Nacchio to resign.

Mr Nacchio has been replaced by Richard Notebaert, the former Ameritech chairman and president and chief executive of telecoms network provider Tellabs.

Problems

Qwest's share price has fallen from $64 (43) in March 2000.

A downgrade of the company to below investment-grade rating and an investigation by the US stock market regulator, the Securities and Exchange Commission (SEC), into its accounting practices have both contributed to the fall.

The SEC is investigating a deal between Qwest and KMC Telecom Holdings.

Qwest sold $450m of telecoms kit to KMC Telecom and agreed to pay back hundreds of millions of dollars in return from services from that equipment.

But Qwest has said it used normal accounting procedures to record the deals, and said there was nothing unusual about them.

Outrage

Last week, Qwest's shareholders rebelled at the company's annual meeting.

They were outraged by Mr Nacchio's $1.5m bonus in 2001, given the company's losses of billions of dollars and the sharp fall in its share price.

Investors were also angry because Mr Nacchio had received $24.4m in long-term incentives last year and because his basic salary was raised from last year's $1.2m to $1.5m this year.

Qwest's partially owned European fibre-optic cable network is bankrupt and on the verge of being closed down or sold.

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Prof Michael Noll, University of Southern California
"The companies tried to create value not through providing services but financial shenanigans."
See also:

14 Jun 02 | Business
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31 May 02 | Business
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