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Carlyle Group faces Hawaiian Telcom heat
Fourth quarter 2007 financial results for Hawaiian Telcom, one of the oldest ILECs in the U.S., are scheduled to be reported on Monday, but The Wall Street Journal is reporting today that the owning the company has turned out to be a tremendous challenge for private equity firm Carlyle Group. Carlyle acquired the telco in 2005 for $1.6 billion from Verizon Communications, but mounting customer service and back office problems led to increased spending to fix the problems, lay-offs and a CEO switch.
When a PE-acquired company stumbles after a deal, the inclination is to blame the greedy buyer who probably knows nothing about telecom anyway, but that lets the experienced telecom managers in the acquired company off the hook too easily. Strangely, employees and customers sometimes end up pining for the former owner, which in most cases was a larger, more experienced telecom company. But to do so is to forget who sold them out and why.
The new CEO brought in by Carlyle, a company with other well-documented financial troubles of its own, is short on telecom experience but long on turnaround experience. If you worked for, or were being served by a telecom company in financial trouble, which kind of experience would earn more of your faith?
For more:
- check out this coverage at The Wall Street Journal
Related articles:
- Former Cisco exec Charlie Giancarlo joined a private equity firm last winter
Comments
Posted by Anonymous | February 19, 2009 - 5:08pm
Carlyle took on a business that they did not do any research on, they just wanted to buy the company and just divide for profit, but when they took it over, they never realized how a telecommunication works and this is why the company is going down hill....so for their wrong doings they ended up laying off alot of very highly qualified employees (2,000 down to 1,400) just to save moniess and they are still in the same hole. They never asked any of the employees for any suggestions, the employees were the ones trying to give their suggestions, but never heard....most of the management team that headed this company didn't know what they were doing, cause they don't do the job, they just deligate and have the hourly do all the work...this is why they are in this situation and it's too late for recovery....that is why Hawaiian Telcom is in bankruptcy as of today and can't get out!
Posted by Anonymous | April 1, 2008 - 1:30am
There is plenty of blame to go around. Carlyle did no due dilligence, no research into the local market, and the management team they brought in bordered on incompetent. ( Who would select Bearing Point to help with the transition when they were losing $500 mil a year and being sued by the Navy?). The local management could also be fingered for having a lack talent with their business as usual attitude.
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