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Employment

Tellabs CEO to Retire... Again

At 65, Michael Birck is the Michael Jordan of Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA). He keeps coming back.

Birck, who co-founded Tellabs in 1975 and nurtured it from six employees to over 4,000 today, this morning announced plans to step down from his post as CEO... again.

Birck retired once before in August 2000. Richard C. Notebaert took over the top spot. But after only 22 months on the job, Notebaert left in June 2002 to become CEO of Qwest Communications International Inc. (NYSE: Q) (see Notebaert Takes Out Nacchio). As a result, Birck came out of retirement and returned as CEO.

Birck, who still owns a large stake in the company, plans to stick around until April 2004. He will continue his role as chairman of the board, a position he has held continuously since the company was founded.

Birck’s retirement has been anticipated on Wall Street since he came back to Tellabs last year. The departure should have little impact on the company’s share price, says Steve Levy, an analyst with Lehman Brothers.

“Our coverage of Tellabs has been continuous for more than 16 years, and in that time we have always viewed Mike as one of the critical factors that defined Tellabs,” he writes in a research note today. “But a new day has dawned for the industry and for Tellabs, and the time has come for Mike to finally turn the reigns [sic] over to a new CEO.”

The big question left unanswered by today’s announcement is who will replace Birck. The Tellabs board of directors is already looking for a replacement. The company, which has hired recruiting firm Spencer Stuart to spearhead the search, says it will consider both internal and external candidates.

Analysts view three executives as likely internal candidates: Anders Gustafsson, president of Tellabs International, Stephen M. McCarthy, senior vice president of operations, and Edward H. Kennedy, president of North American operations.

Kennedy has had a quick ascent within Tellabs, since joining the company in 2001 after the acquisition of Ocular Networks (see Tellabs Nabs Ocular). Months after the acquisition, he was appointed senior vice president of metro networking (see Kennedy Takes Charge at Tellabs). His responsibilities grew in this role (see Tellabs Regroups, Promotes Kennedy). And then in March of this year, he was promoted once again to president for North America (see Tellabs Names Kennedy President). While Kennedy is a strong candidate, analysts say it's still too early to tell who will be chosen.

“I think the position is still up for grabs,” says Levy. He says the company has more pressing issues to deal with in the interim. “They need to get back to sustainable profitablility. I don’t think a change in the CEO will change that in the next few months.”

For the third quarter of 2003, Tellabs’ revenues were $245 million, up 5 percent sequentially from the previous quarter (see Tellabs: More Work to Do ). But the company still had a net loss of $64.8 million ($0.16 per share). This was an improvement over the previous quarter, which showed a net loss of $111 million ($0.27 per share).

— Marguerite Reardon, Senior Editor, Light Reading

BobbyMax 12/4/2012 | 11:17:01 PM
re: Tellabs CEO to Retire... Again It is not certain as to when Tellabs will return to profitability.The company's acquisition activities and overstaffing has contributed a lot to unprofitability. It contiues to aspire in different directions, but it does not want to commit its exixting resources to doing the R&D work. But it wishes to follow the route of acquisitions to move in different areas. For example, it is well known that Tellabs wants to enter the access business through acquisitions. This could have adverse impact on the profitability of the company.
alcabash 12/4/2012 | 11:16:56 PM
re: Tellabs CEO to Retire... Again Kennedy is definetely the best insider candidate, he is the most dynamic exec and understands more than sonet. I would vote for him. And please do not call Pat Russo for the job !!!
ThouShaltNotJudge 12/4/2012 | 11:16:47 PM
re: Tellabs CEO to Retire... Again alcabash,

Just curious, but what are Kennedy's qualifications? What was he doing before Ocular?
douggreen 12/4/2012 | 11:16:46 PM
re: Tellabs CEO to Retire... Again People sometimes mistake Ed for a fast-tracker with little experience, probably because he looks so young (he is 48 according to Tellabs web site). He is not.

The Tellabs website only covers the later stages of Ed's career, but I happen to have access to material from Ocular's old website ;) He stareted his career in engineering and later moved into marketing. He worked at COMSAT, MACom,and Harris. His executive management experience includes Stantel (VP and GM), Dynatech (VP of Marketing), Newbridge (VP of Mktg), and Alcatel (via their aquisition of Newbridge).

He has obviously been around. I would say that Ed is unique in that he has been succesful in executive management at both large comnpanies and starutps.

optical 12/4/2012 | 11:16:45 PM
re: Tellabs CEO to Retire... Again I think Bobby Max should get the Tellabs CEO position.
ThouShaltNotJudge 12/4/2012 | 11:16:45 PM
re: Tellabs CEO to Retire... Again Thanks for the info. Yes, it would seem from your description that he is duly qualified. It's more important for a CEO to possess some general management experience as specific segment knowledge. If he's a smart guy, he has accumulated proper technical knowledge of the TLAB product line and its customers.
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