Board of directors allegedly wanted faster pace of change from one of the telecom industry's change pacesetters.

December 12, 2014

3 Min Read
Gardner's Departure a Cautionary Tale

The abrupt change of leadership at the top of Windstream appears to be a response to the recent financial struggles of a company that seemed determined to innovate its way out of its traditional staid telecom role. (See Windstream Names Thomas CEO, Gardner Resigns.)

Jeff Gardner, who resigned this week, has headed Windstream Communications Inc. (Nasdaq: WIN) since its creation in 2006 and was leading the company through a transition to more of a business services play with a broader -- if not quite national -- footprint of cloud services and interconnected data centers. In addition, he was a big proponent of the company's strategy to spin off its network assets into a REIT (real estate investment trust) so that the network could be operated separately from the services business. (See Is Windstream Boldly Setting a New Trend? and REIT Bandwagon May Be Small.)

It was a strategy that impressed some analysts -- such as Motley Fool's Anders Bylund -- but apparently wasn't enough to satisfy Windstream's board of directors when the company's third-quarter results missed analysts' expectations and triggered a stock price drop of almost 10%.

In announcing his resignation, Gardner said in a statement that he and the board agreed that "a change in perspective is needed in order to accelerate the pace of change within the company and to more effectively respond to the rapidly evolving needs of our customers."

It's a bit hard for me to imagine how Windstream will accelerate change going forward under new CEO Tony Thomas -- the former Windstream CFO who had been tapped to head the REIT -- but I'll be interested to see that happen.

In the past year alone, Windstream -- in addition to launching the REIT strategy -- has purchased a broadband wireless company focused on business services, launched a new pay-TV service, created new customer portals for its carrier and cloud services, created its first national DWDM network, expanded its long-haul 100G network, and expanded to almost 30 data centers nationwide with a focused regional cloud services strategy.

In short, this was not a company that was standing still. If anything, its pace of change within the last year was as fast as any of its telecom brethren, yet apparently not fast enough to save the CEO's job.

So either Thomas has to really put the pedal to the metal going forward, or "pace of change" is a cliché used to disguise what really prompted Gardner's resignation.

Here's a look at our coverage of Windstream's activity this year:

— Carol Wilson, Editor-at-Large, Light Reading

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