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C&W appoints new chairman
Is it enough?
Cable & Wireless Plc has bowed to the demand of irate investors and has appointed experienced outsider Richard Lapthorne as chairman - a move that is expected to be the precursor to the departure of chief executive Graham Wallace.
The main virtue of Lapthorne, who chairs the boards of five other companies, is that he has no previous connection with C&W. His role will be to try to find a way to extricate the company from its current plight that has brought about a collapse in its share price after it reported a $7.3bn first-half loss.
Investors have not forgiven Wallace after he burned a 6bn pound ($9.6bn) cash pile acquiring web-hosting companies at a time when the whole industry was investing in an over-capacity of such assets. They proved a superb way of burning money as everyone slashed prices to keep customers.
The final straw was the revelation that 1.5bn pounds ($2.4bn) of its remaining 2.4bn pounds ($3.8bn) cash is ring-fenced to cover any tax liability that Deutsche Telecom AG may face after the German incumbent's 1999 acquisition of its 50% stake in wireless operator One2One from C&W. This week C&W said that this money had been placed in an escrow account where it must wait for a "number of years" for a decision from UK tax collectors.
Oblivious to the odium in which the investment community held it, C&W planned to replace retiring chairman Ralph Robins with existing director David Nash. But a meeting between directors and shareholders representing a "significant proportion" of the company's equity in November convinced Nash that someone who had backed Wallace's strategy did not command the confidence of investors and he quit the board.