Broadwing Corp., the Columbia telecommunications company formerly known as Corvis Corp., said yesterday that founder David Huber stepped down as chief executive officer as the company moves into the role of service provider.
Huber, who led Corvis through the technology boom and its subsequent stock fall when the bubble burst, will remain chairman of the company's board of directors. A replacement for CEO has not been named, but the board is beginning a search and expects to hire Huber's successor during the second quarter, said company spokesman Donovan Dillon. In the meantime, a senior management team of three executives will run the day-to-day operations of Broadwing, the company said.
"My reduced role in the company will allow for a smooth management transition, while enabling me to spend more time with my family and on my other ventures," Huber said in a statement yesterday.
Broadwing has never been profitable, though Dillon said the company has shown financial improvements and is "literally teetering on the edge" of profitability. Broadwing reported a net loss of $30.5 million, or 41 cents per share, on revenue of $218.7 million for the third quarter of 2005.
Huber will receive $400,000 in severance, or about a year's base salary, according to documents filed yesterday with the Securities and Exchange Commission. Huber also will receive health benefits for 18 months or as long as he is on the company's board - whichever is longer, and all of his options and restricted stock will be immediately vested, according to the SEC document. Huber owns about 9.5 million shares of Broadwing common stock, according to a December regulatory filing.
In 2004, he was granted 170,000 stock options and 250,000 shares of restricted stock, according to regulatory filings.
Huber's move to step down as chief executive comes as the company makes the transition from telecommunications equipment maker to a voice, data and media service provider. Given that transition, Dillon said the time was right for a "new stage of leadership" for Broadwing.
"It's really a recognition to take Broadwing to the next level," Dillon said. "A change in leadership that was more ideally suited to a telecommunication service environment would be beneficial."
Huber's involvement in Maryland's telecom business predates his days at Broadwing. Indeed, the two companies he founded - first Linthicum-based Ciena Corp. and then Corvis - rode the telecom wave from the boom of the late 1990s to the bubble-bursting a few years later.
Huber founded Ciena, a telecommunications equipment maker, in 1992. But Ciena had to take on outside management to get needed seed money, which would later prove problematic. Huber helped take the company public in February 1997 - it had a first-day value of $3.4 billion, the highest at that time for a venture-backed startup - but left that May in a management dispute.
The next month, Huber founded NOVA Telecommunications Inc., the company that in 1999 would be renamed Corvis. At that time, the company's core products were equipment for all-optical fiber-optic networks that carry voice and data.
Corvis made a splash on Wall Street when it went public in July 2000, raising $1.1 billion in its initial public offering. Shares closed the day of the offering at $84.72, making the company then worth more than $28 billion. The IPO was mentioned in a high-profile Wall Street trial: Former investment banker Frank P. Quattrone sent an e-mail to Dell Computer Corp. founder Michael S. Dell regarding the stock offering, according to prosecutors who helped convict Quattrone of obstruction of justice in 2004. Quattrone is appealing.
Shares of Broadwing, traded on the Nasdaq, rose 43 cents, or 4.9 percent, yesterday to close at $9.28.
In 2003, Corvis acquired Broadwing, a long-distance service provider, and in 2004 changed its name to Broadwing. That year, the company also acquired Focal Communications Corp., a Chicago-based local exchange carrier.
"Over the past couple of years, we engineered a significant transformation of the company and are now well-positioned to make continued advances toward profitability," Huber said in the statement. "The recent consolidation in the industry combined with Broadwing's emerging market position has provided an excellent opportunity to transition the executive leadership of the company."
Huber was not available yesterday for comment beyond his statement.