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ADC CEO Jumps Ship to MCI

ADC Telecommunications Inc.'s (Nasdaq: ADCT) chairman, president, and CEO Richard "Rick" Roscitt announced his departure today to join MCI (Nasdaq: MCIT), a.k.a. WorldCom, as president and COO (see ADC Shakes Things Up).

So what's behind the move? Has MCI tendered "Rick," a former AT&T Corp. (NYSE: T) executive who moved to ADC in February 2001, an offer so attractive he can't refuse? The carrier's chairman and CEO Michael Capellas clearly needs as much help as possible as MCI struggles through bankruptcy and investigations into its former financial dealings (see The Week at WorldCom, Government Bans MCI, and so many more). In that vein, MCI just got a new top lawyer (see MCI Hires New General Counsel).

Alternatively, is it possible "Rick" is jumping ship a week before ADC announces its third-quarter results August 20? This seems less likely, as the company's been hinting it might reach breakeven ahead of schedule, following an effective cost-cutting strategy. Not a bad time for an ambitious, and perhaps bored, CEO to cut loose. Still, ADC isn't out of the woods yet: Its past two quarters have seen decreasing losses, but also decreasing sales (see ADC Reports Q1 Results and ADC Q2 Sales Slip).

The lure of a big new challenge in plenty of limelight can't be discounted as motivators for the move. Neither can the lure of the greenback. Though it's not clear yet what MCI has offered "Rick," he seems to like a fat wedge to go with hefty job titles (see Exec Pay Defies Downturn, 2001 Top Ten: Fat Cats, Fat Cats Feast, Despite Layoffs, and Rick Roscitt).

At press time, MCI hadn't returned calls regarding such compensation.

Filling the ADC CEO and prez hotseats is CFO Robert "Bob" Switz. In a conference call this morning, Switz waxed brash, saying news of "Rick's" departure came at "relatively short notice, but it was certainly adequate time enough to make the right decisions."

Asked about ADC's relationship to MCI, Switz said: "WorldCom was one of our largest customers in the past, but I'm not sure where it fits into our Top 25. It's not one of our top customers just now."

A new CFO for ADC is being sought. John "Gus" Blanchard III has been named non-executive chairman.

ADC also announced recently a new president for its software business, Dilip Singh (see ADC Names Software Prez and ADC Plans Software Expansion). Presumably, he's known as "Dill."

— Neal Raymond "Ray" Le Maistre, International Editor, Boardwatch

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BerkeleyWolf 12/4/2012 | 11:35:43 PM
re: ADC CEO Jumps Ship to MCI very good...
BerkeleyWolf 12/4/2012 | 11:35:43 PM
re: ADC CEO Jumps Ship to MCI good one...
swprincipal 12/4/2012 | 11:35:42 PM
re: ADC CEO Jumps Ship to MCI You are, indeed, The Master.

This article made my day.
BobbyMax 12/4/2012 | 11:35:28 PM
re: ADC CEO Jumps Ship to MCI The ADC CEO, Rick Roscitt, did do nothing for ADC. He filled his pocket with a lot of salary, stock options, sign-on bonuses and many other crrked ways to benefit from the company. During his years, ADC saw the worst revenue decline and other pitfalls. His move to MCI is a surprise.

It is equally surprising that he got the job at ADC. As long as the US companies are engaged in meritless hiring and promotions, the rest of the world is not going to do business with the US. The history of corruption and favortism moves across the continents.
Iipoed 12/4/2012 | 11:35:27 PM
re: ADC CEO Jumps Ship to MCI Agree with BM. Since ADC lost (he retired) Cadigan this company has gone down hill. They put all their eggs in the carrier basket and it got them a stock price of 2 bucks. They shed CPE companies that were the benchmark for their specific products (Kentrox, I worked there for 4 years) and adopted the mentality of if it requires power to function it is too complicated for ADC.
All senior execs had one charter, get to a single digit handicap and most of them did.
grapsfan 12/4/2012 | 11:35:27 PM
re: ADC CEO Jumps Ship to MCI I'm ex-ADC too (left in 98, while Cadogan was still there)...so I really don't know anything about Roscitt personally. Considering the timing of when Cadogan "retired" (really, joined a VC to make big coin for his name value), it's not fair to blame ADC going downhill solely on Roscitt. I mean, what telecom company hasn't gone downhill since 1Q01? That said, friends of mine who're still there don't have a lot positive to say about the situation either.

The interesting part, to me, is where he's going...MCI does not have a lot going for it right now. The best thing they have to look forward to is exiting Chapter 11. They still have to clean up their org charts and 50-providers-crammed-into-one-network nightmare. They still need to get footing into a space other than long-distance (read: one where you can make a profit). They have NO wireless play, one of the few growing markets.

I suppose this is a win-win situation for Roscitt. If MCI comes up (and they have nowhere to go but up), it's a reputation boost, and I'm sure he'll be rewarded handsomely. If MCI stays down and goes under, well, he was in an impossible situation, his golden parachute kicks in, and he'll be rewarded handsomely.
SS7 12/4/2012 | 11:35:09 PM
re: ADC CEO Jumps Ship to MCI Not a huge fan of Rick but to a certain degree he was / is a victim of bad timing. His grotesque salary did not help.

As for some of his so called business moves, not sure why he ever rid ADC of Kentrox. They were consistently a top producer/most profitable division within ADC and it was clear he just flat out did not understand the business.

As for Kentrox - they are still breathing with a Management buyout and good quality products. I always get a kick out of no recognition Lightreading gives Kentrox for being THE LEADER in the ATM access space......
defacto 12/4/2012 | 11:35:02 PM
re: ADC CEO Jumps Ship to MCI
I agree with you, Iipoed, but realize that Cadogan built a house of cards that Roscitt (or anyone) could not have prevented from tumbling. You're absolutely right, ADC did not fundamentally understand anything more complex than a patch panel.

For a good long while, the growth-through-acquisition strategy worked, but that is because good companies like Kentrox and ALS were available at cheap prices in the early 90s(between 1X and 2X annual revenues), and because ADC left them alone. But then hubris kicked in, and ADC started centralizing as well as making some terrible technology bets (Cellworx, Homeworx). They starved the cash cows (Kentrox), flushed money down the toilet, and eventually it all unraveled. I don't know what Switz does with it now - the product line still doesn't make sense (patch panels and Cuda CMTS boxes - where's the synergy)?

I hope you were at Kentrox during the Golden Era, the Bill Porter / Rick Gilbert years - those were some good times.
defacto 12/4/2012 | 11:35:01 PM
re: ADC CEO Jumps Ship to MCI
Kentrox never fundamentally belonged within ADC to begin with. Kentrox did great when left on its own, with ADC basically acting as a holding company. But the more ADC tried to integrate it with the rest of the corporation, the worse things got.

Yes, Kentrox was a leader in the ATM access concentrator space, but ADC decided to bet bigtime on ATM virtual path rings (does anybody recall this technology - it's one of the all-time most boneheaded ATM technologies, along with LANE, ATM25 and ABR). Kentrox's profits effectively funded these and other ADC disasters, and eventually everything cratered.

I'd love to see Kentrox rise from the ashes, but the damage they've incurred is massive and perhaps fatal.

Iipoed 12/4/2012 | 11:35:00 PM
re: ADC CEO Jumps Ship to MCI SS7, don't forget the most over engineered DSUs in the industry. I sold a ton of them as well as many ATM concentrators (univ. of Hawaii).
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