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Broadwing Soars as Huber Goes

Broadwing Corp. (Nasdaq: BWNG) continues to shuck its Corvis heritage, as Corvis founder David Huber announced today he's stepping down as the servicer provider's CEO.

Investors seemed downright cheery about the move. Broadwing shares rallied nearly 5 percent, rising $0.43 to $9.28. A visit to the Yahoo Inc. (Nasdaq: YHOO) stock message board for Broadwing, in fact, revealed some virtual high-fives and folks actually saying, "Yahoo!"

"It's never a good sign for you if you're the CEO and the shares rally when you leave," said one Wall Street analyst who covers Broadwing, asking -- pleading, rather -- for anonymity.

Huber is the legendary optical networking guru who founded -- and later fought with -- Ciena Corp. (NYSE: CIEN). In 1997 he started Corvis, which eventually acquired its largest customer, Broadwing. (See The Top 10 Movers and Shakers in Optical Networking and The Optical Future.)

Combined with last year's announced selloff of Corvis's products, Broadwing appears to be moving to shut the door on the Corvis legacy. Broadwing is heading back to its roots as a pure service provider without the baggage of an equipment division.

Corvis was a company packed with promise and controversy from the start, but its all-optical technology never quite lived up to the promise of its spectacular IPO in 2000, in which it attained a valuation in excess of $37 billion, with zero revenues. (See Doctor Huber's Revenge, Life After Corvis, Avici and Corvis Make Stunning Debuts, Corvis's Secret Sauce?, Life After Corvis, A Survey of the Corvis Food Chain, and The David Huber Game.)

Huber invited more controversy by leading Corvis to inside dealings, including the acquisition of Dorsal, an undersea fiber optics firm in which Corvis and Huber both held stakes. (See Corvis Dorsal Deal: A Huber Spin-In?)

Eventually, Huber engineered the takeover of Broadwing. Corvis took the latter's name, put Huber in charge, and angered investors even more by diluting the company's shares in the transaction. (See Corvis & Broadwing: Together At Last and UMTS Forum Waffles in China.)

Huber still retains a substantial stake in the company -- nearly 9 percent, according to recent filings. And he will remain chairman. So he's not going away any time soon.

"I can't imagine Dr. Huber not being actively involved. Broadwing is his baby," says Donovan Dillon, Broadwing's vice president of marketing.

The logic of the change seems simple: Huber is a technology guy who doesn't necessarily know how to run a service provider.

"It was recognized on the part of Dr. Huber and the board that as Broadwing matures in its life cycle as a telecom service provider, the time was right for a new kind of leadership," says Dillon.

"The fact that the company will be run by a real, operational CEO is being welcomed by Wall Street," says another analyst who requested anonymity.

Only one catch: Broadwing hasn't yet found a successor. The company says it's started a search.

Broadwing's top ranks have changed quite a bit lately. President Jim Bannantine exited nine months ago, when Broadwing announced it intended to sell off Corvis's product line, and its COO John McLeod left in October. (See Broadwing to Sell Corvis Business and Broadwing COO Departs .)

Some Wall Street sources say the persistent speculation is that Broadwing is being cleaned up for a sale, with the recent acquisition of WilTel by Level 3 Communications Inc. (NYSE: LVLT) serving as a model. (See Level 3 Takes Out WilTel.)

Broadwing insists the changes don't add up to anything larger. "I would not take those two data points, couple them with this, and extrapolate," Dillon says.

— Craig Matsumoto, Senior Editor, and R. Scott Raynovich, Editor in Chief, Light Reading

fanfare 12/5/2012 | 4:07:38 AM
re: Broadwing Soars as Huber Goes Craig,

Corvis/BWNG investors and sector enthusiasts are not following the message boards on Light Readingas much these days. I'm not sure about all of the reasons; I am inclined to believe that it may be something as simple as LR's seeming desire to put message boards somewhat off the beaten path in regard to the web page format. Granted, anyone with even a cursory familiarity on web page navigation can find his/her way to the message boards; however it might be that people have percieved (due to the not so recent change in format) that LR has decided that it's message boards are no longer an integral part of the site. When the top company chat threads were more prominent there were clearly more people posting both on articles and on general company threads.

Frankly, I miss the discussions on this board. Your threads previously attracted posters/readers who had a greater understanding of telecom technology. Most of us are now forced to discuss our ideas/concerns on boards that are filled with daytraders and/or pumper/dumper types.

Of course there is also the fact that BWNG, as a company lost some of it's attraction for serious telecom buffs. The company hurt a lot of people who believed in the technology and the potential behind it. When there was nothing left to say on a positive side (nothing that contained any real technological "meat") there really was nothing left to argue for or against. Remember, the article on Huber leaving is perhaps a victory for shareholders, but it does not represent a technological move in any way. Since most posters/readers on this board are interested in discussion development and viability of groudbreaking and/or disruptive tech .. this article will only appeal to those whose interests are primarily investment, not technology.

As far as my position, I'm mostly happy about Huber stepping aside, however much of the damage in a fiscal sense has been done already. I'm happy with Huber's operational improvements to BWNG, but it would have been great if we could have balanced this with some business sense. Now that he's apparently given way to the idea that he may not be the best man for the job when it comes to day to day business practices, there seems to be little room for doubt that Huber did wreak some degree of havok while at the helm. This is bound to be disconcerting for those who thought he held some secret up his sleeve and that one day he would be vindicated when he, like A.G. Bell had been when he went up against Western Union. Remember that analogy? I wrote it here years ago .. so it seems that I too held some reverence for Elder Huber.

This last move where he did a 50/50 on the PIPES convinced me that he really didn't know what he was doing and that he was now trying to get out with whatever he could. After all, a move that allowed the company to keep a mere $16 million could hardly be taken with any degree of seriousness; and though the dilution was small, it was still irritating due to the representational factor. It was almost a last kick in the pants to the small investor.

Well, now Dr. Huber is gone. I suppose we might envision him thinking to himself "now they won't have Huber to kick around anymore" This will be true at least during conference calls. I think Huber will be glad to be rid of the spotlight that comes with running a public company, but remember he'll still be around so though he won't be in the forefront and in a "kickable" position, we may still feel the wrath of his voting capability. I wonder how long the new CEO will be around once he IS found.

ff
Pete Baldwin 12/5/2012 | 4:07:38 AM
re: Broadwing Soars as Huber Goes As someone mentioned on another article's board ... I'm surprised there hasn't been massive discussion of this.

Doesn't anybody want to say anything? No gloating? No weird theories?

Somebody say something! Huber is gone! Corvis is dead! No, wait, Corvis will RULE THE EARTH!! Killing puppies -- I'm all for it! Tachion! Tachion!
SIVROCX 12/5/2012 | 4:07:37 AM
re: Broadwing Soars as Huber Goes Who is really to blame? Is it Dave Huber or those of us who gave our time, money, hopes and dreams and expected a miracle that would flood money into our accounts with little or no work on our part. We share in the blame for our wallets being much lighter than expected. OK that is my part of the blame. But Dave you were a big part of the downfall as well!

How do I know, well lets just say you surrounded yourself with PhD's (nothing wrong with PhD's per say) but not a one of them had the business sense of a rock. You thought that anyone that wanted to organize work, manage it, serve the customer, pay a mind to product cost didn't know jack! Not worthy of making decisions or having real responsibility. If just once during the Monday technical meetings you would have stayed awake, (meaning eyes open) not just waiting for the meal to be delivered from Elkridge Furnace, and listened to the babblings and fighting of your race horses you would have learned early on your need for a real management team.

Many times the technical brains of an operation are best served by those who know how to run and operate a business, but you never wanted to recognize other contributors to the business. You fell to the final few that would spy on the rest of the organization and tell you how screwed up everyone else was with development folks cleaning house in manufacturing and then slowly but surely turning on their own and picking them off one at a time. Right down to the last, but still standing Stanford PhD who has demonstrated that even at Broadwing can still lie and spy with the best of them.

Dave H., I still (with no malice of forethought) think you are a smart technical man with vision. You just allowed, as the Bible says, your own personal pride to get in the way of good sound business decisions (not the first person and most certainly will not be the last).

I wish the present and ex Corvis development team the best of luck in the future and hope for the Broadwing Corporation to achieve real profitability thus changing the value of the stock in the right direction.

Oh, and one more thing. For those of you that are not up on your Latin, Homo homini lupus means "Man is a Wolf to Man". So while you got em down folks enjoy chewing on Dave because it is about all the satisfaction your going to get now. +£
Belzebutt 12/5/2012 | 4:07:36 AM
re: Broadwing Soars as Huber Goes Ahh... a good old-fashioned Corvis thread!


Who is really to blame? Is it Dave Huber or those of us who gave our time, money, hopes and dreams and expected a miracle that would flood money into our accounts with little or no work on our part. We share in the blame for our wallets being much lighter than expected. OK that is my part of the blame. But Dave you were a big part of the downfall as well!


I blame Sparxe and all the other dinosaur-bashing crackheads who thought Huber was the second coming. Hey guys, video on demand is here, now where is the unique amazing all-optical Hubernetwork? As someone who's been bashed dozens of times for doubting the awesomeness of Corvis gear, I take great pleasure in saying TOLD YOU SO. You should not have had blind faith, you should have been skeptical, you should not have had blind faith, and you should not have played the role of Hubertologist attack dogs.

There, I said it.

Corvis/BWNG investors and sector enthusiasts are not following the message boards on Light Readingas much these days. I'm not sure about all of the reasons; I am inclined to believe that it may be something as simple as LR's seeming desire to put message boards somewhat off the beaten path in regard to the web page format.


I'm not sure where you get this, the article discussions are in the same place as always, and I noticed that LR staffers are now required to start a discussion for every article.


Ok gotta go, my trophy wife says it's time for the 2pm drink on the bow of the yacht...
russ4br 12/5/2012 | 4:07:34 AM
re: Broadwing Soars as Huber Goes Unless NT pays way better than I think, that bow of the yatch is most likely the front end of a 10' john boat.

Maybe he come onboard with the Alteon acquisition? Those guys made good money on their options ...

-russ
paolo.franzoi 12/5/2012 | 4:07:34 AM
re: Broadwing Soars as Huber Goes
Well, I respect the guy for having a vision and starting a company to execute on it. I also think they did a good job in morphing the company and providing the new shareholders with a way of having something. Desh has yet to do that.

On a personal level the guy was a arrogant prick. This made him want too much for his vision when it was long clear that it was going nowhere fast.

seven
Baron23 12/5/2012 | 4:07:34 AM
re: Broadwing Soars as Huber Goes Belzebutt - yes, there is much to legitimately criticize about Corvis' history and Huber's stewardship of investors money... yes Sparxe NJ is badly in need of anti-psychotic drugs and will now have to find another messianic figure to worship... but also some of us have a long memory and recall that you were a completely partisan basher (just the other side of the coin from Sparxe) and that...if I recall correctly.. you are/were a sales eng for NT, a company who also made billions in market cap blow away in the wind, and nobody seemed to feel that you were a particularly objective voice in the matter (a condition that seems to persist).

Unless NT pays way better than I think, that bow of the yatch is most likely the front end of a 10' john boat.
pastel 12/5/2012 | 4:07:33 AM
re: Broadwing Soars as Huber Goes Hey,

Don't you go trashing Tachion in this thread, that's our job!!!!!
Belzebutt 12/5/2012 | 4:07:31 AM
re: Broadwing Soars as Huber Goes but also some of us have a long memory and recall that you were a completely partisan basher (just the other side of the coin from Sparxe)

I challenge you to find ONE post where I criticize the Corvis solution and advance my own employer's solution as the ultimate answer. The fact is all I did was bring up facts such as the lack of customers and pointed out that this casts a doubt on the veracity of Corvis' technical claims. All the Hubertologists started bashing me after that and automatically assumed I was a dinosaur stooge. Again, find the posts where I say anything close to "dis shite don't work, buy NT gear instead!"

Unless NT pays way better than I think, that bow of the yatch is most likely the front end of a 10' john boat.

You got me, I actually posted this while splashing around in my dingy... but what you don't know is that the dingy is floating in the pool at the stern of the yacht! Now excuse me, my trophy wife wants to give me another back rub.
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