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Global X'ing shake-up lifts
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March 3, 2000: 2:18 p.m. ET
Buyout buzz, CEO shake-up, hot market said to boost telecom firm's stock
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NEW YORK (CNNfn) - Shares of Global Crossing Inc., a leading layer of undersea cable used in the telecommunications industry, rose 4.6 percent Friday, a day after announcing Chief Executive Officer Robert Annunziata has resigned and the creation of a tracking stock for its Web-hosting business.
Shares of Bermuda-based Global Crossing (GBLX: Research, Estimates) which telecom industry veteran Annunziata led through a buyout binge during his year-long tenure, rose 2-1/2, to 56-7/8, shortly after 2 p.m. ET Friday. Analysts also credited a strong day in the stock market overall, spurred by a friendly jobs report that drove up the Dow industrials rose 215 points Friday afternoon.
Also factoring into investors' minds, however modestly, analysts said, was revived speculation Global Crossing has held buyout talks with the German phone giant Deutsche Telekom AG (DT: Research, Estimates), which is said to be speeding up plans to become a global telecom giant through acquisitions.
A source close to the matter Friday, interviewed by CNNfn.com, denied recent reports that Global Crossing and Deutsche Telekom were currently talking about a merger. However, the person said talks have taken place "off and on" over the last several months - most recently about six weeks ago.
Former TCI whiz Hindery to take helm
Late Thursday, the company unveiled that Leo Hindery, who last October announced he would join Global Crossing after running AT&T Corp.'s cable and Internet unit, will take over as CEO effective immediately. Annunziata will stay on the Global Crossing board.
Hindery, who helped build cable provider Tele-Communications Inc. before it was bought by AT&T, will also remain CEO of Global Crossing's web hosting and Internet infrastructure unit GlobalCenter Inc. Global Crossing also said on Thursday it plans to create a tracking stock - or a separate issue that tracks the specific performance of a company segment - for GlobalCenter.
"Leo knows how to run large companies, he has current Internet experience and he has a proven record of creating shareholder value," said Gary Winnick, chairman and founder of Global Crossing, in a statement Thursday.
Indeed, analysts -- and Annunziata himself -- cited Hindery's experience in operating a large company for the handover of Global Crossing's reins, while Annunziata prefers taking companies from the pony leagues to the big time.
"My passion is taking small companies and growing them into large companies," said Annunziata in a statement. "In the past year, Global
Crossing has accomplished what I thought would take three-to-four years to achieve. My long-time friend Leo Hindery is the right person to lead Global Crossing in the next phase of its development."
One analyst said he was caught somewhat off-guard by the CEO shakeup.
"I was not completely surprised, based on the rationale, but I was not suspecting that Leo Hindery would be taking [Annunziata's] place," said Matthew Janiga, an analyst with investment bank Lazard Freres & Co., who has an "outperform" rating on Global Crossing shares. "It makes sense - Leo has better skill set and superior integration skills."
During his stint, Annunziata led Global Crossing through a successful effort to buy U.S. long-distance carrier Frontier Corp. for about $11 billion, but saw his bid to buy Baby Bell U S West Inc. (USW: Research, Estimates) topped by Qwest Communications International Inc. (Q: Research, Estimates). The Frontier-Global Crossing deal has closed; the Qwest-U S West deal still faces regulatory approvals ahead of an expected closing this summer. 
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Global Crossing
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