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?
- check out this coverage at The Wall Street Journal
- Former Cisco exec Charlie Giancarlo joined a private equity firm last winter