Level 3’s Crowe to Leave After 2013

March 7th, 2013 by · 45 Comments

Level 3 Communications (NYSE:LVLT, news, filings) is going to be looking for some new leadership this year, as the company has just announced that its CEO James Q. Crowe  is planning to transition out of that role by the end of 2013.  The company's board of directors has formed a transition planning committee to help identify the next CEO.  The exact timing of Crowe's departure is subject to change "at the Board's discretion in consultation with Mr. Crowe", which likely means that it will happen whenever the new guy or gal is ready to step in.

james croweCrowe has been the driving force behind Level 3 since the beginning, riding high in the the dot-com years, surviving the bursting of the bubble, weathering the telecom nuclear winter, and helping to drive the multiple waves of consolidation since.  After Genuity, WilTel, Broadwing, Global Crossing, and a host of others, Level 3 is a much bigger place now than it was 15 years ago; but more importantly it is still here - unlike so many others.

The company has fought  doggedly to grow into its once out-sized debt load, and is now at long last on the cusp of becoming sustainably both free cash flow and earnings positive.  As a result, whoever takes over will have an easier job than that which has gone before.  Not easy mind you, just easier.  The timing makes a lot of sense, as the integration of Global Crossing is over the hump, no imminent external dangers are at hand, and a fresh start and new perspective just might really help the company find that higher gear it has been looking for when it comes to revenue growth.

There will be speculation that Level 3's earnings report last month precipitated the timing of this change, and it's probably not that far off given his status as a lightning rod for increasingly impatient investors.  But most who have followed the company the way I have have been expecting a transition announcement to hit sooner or later anyway.  The only question now is whether the company's board of directors and the large investors that largely control it will look for outside blood or simply elevate Jeff Storey.

The other thing that will come up more seriously this year than in the past is perhaps Level 3 as an acquisition target itself.  I still doubt that is in the cards, but it's not nearly as unthinkable anymore with the balance sheet more, err, balanced.  We shall see.

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45 Comments So Far


  • Anonymous says:

    That is a morning bombshell although in reality not unexpected.

    To fully transition Level 3 and “rebrand” I believe it is absolute requirement that they go outside the company rtaher then promote Jeff Storey. Jeff appears to a respectable leader but promoting him is a little like business as usual. And the business since he has been a COO has not improved maybe went down but certainly has not changed for the better.

    Big difficult job but new blood with seasoned big company professional who comes and brings with them a big company senior leadership team is what Level 3 needs both publicly and internally.

  • ABC says:

    About time this con man moves on and maybe the company can regain some credibility.

  • M. Hawkins says:

    The Plan:

    Level 3 and Zayo merge.

    Dan becomes the new CEO.

  • toddforthree says:

    My best guess is Jim ends up in some capacity working for Obama. Its not like he can sell his track record to other companies so he needs to rehabilitate his image and the fcc or some govt security agency is my best guess where he goes to do that.

  • LVLT Veteran says:

    I agree it is about time for some new blood to take over the company and with that a better understood mission statement. Level 3 has been struggling with its identity for several years now (since Storey) on one side they are the dominant wholesale network provider (Google, Ebay Netflix, FB,etc as customers) and on the other side they want to compete for small business enterprise (Joes Plumbing) revenue.. The latter is completely locked up by Verizon, ATT, Time Warner, and now Comcast who have the “on-net” advantage over Level 3. These customers take just as long to convert and a waste of the Sales force energy. Let them sign up online for T-1’s and managed Firewall.. Good grief!

    If I were the new CEO I would completely can the Mid Market business and only focus on the large scale business applications: Fiber, Transport, Data Center, IP and also make a real push into the cloud. (Sorry for the buzz word) yet Level 3 operate several million sq ft of Data Center space and they cannot figure out how to fill their Data Centers with high margin service consuming tenants. With all that space and fiber they should be able to deploy an Amazon-like offering that will allow business customers to sign up and quickly deploy compute cycles and/or CDN type functionality.. Innovate, innovate, or evaporate.. That is where the market is going and don’t tell me they would be competing with their customers because that is the way of the Telecom world.. Cloud services market will reach $170 Billion in 4 years- just google it.

    Final though is the culture. Level 3 has seen a mass exodus of it’s best people and that is because it is not a great place to work anymore. (Check glassdoor.com). The sales teams are not allowed to over achieve their commission plans while the operations side are constantly in fear of losing their jobs.

    Yes it’s time for new,younger,smarter leadership and maybe Level 3 will get it’s mojo back..

  • A N O N says:

    It took all of 3 comments for Dan to be mentioned as a possibility…seriously doubt it would happen but if L3 is serious about making money for investors then they have to at least ask Mr. C.

  • P. Watsa says:

    Walter Scott needs to make the call to Mr. Dan C.

  • Fibermancer says:

    Of course Zayo/Dan is an obvious comment here, but any thoughts of the ABV execs making a return here?

    • CarlK says:

      Zayo/Mayo I say. LVLT promises salvation to the WORLD with their pipes and noone who runs a pimple of a COMPANY should get the REINS of this thorobred. ROCKEFELLER MAYBE but he’s dead I think maybe. MUNGER, yes. WEB, of course but I would INSIST he give up his other job….. i had something else wonderful to SAY now but it went to the secret part of my mind and I”M SCARED to go retrieve it.

      • Carlk Translator says:

        I feel compelled to translate above. To that end see the following:

        Level 3 is on a path of strategic transformation that will require someone with significant global telecom and transformation strategy to help it achieve its goals. To that end there are several potential candidates who could do this though experience with cultural transformation and operational execution will be key in whoever is ultimately hired.

        • Paul says:

          I think CarlK’s comment was simpler and easier to understand: Level 3 is a highly complex company and needs a CEO who has experience running such a thing. Someone with success running a small or less complex company may not succeed here.

          I liked CarlK’s comment. I do wonder, however, whether there might be some value in a CEO who at least understands the potential value in simplicity and focus.

  • Jeff Storey's Id says:

    If they don’t plan to give me the top spot, they better bonus-up immediately or I’m outta here. If they don’t negotiate a sweetheart severance deal today that includes 2 years of salary and 2 years bonus plus vesting all my RSUs and options, I’ll have this stock hovering at 13 by the time the new CEO steps in.

    You see, you can’t expect me to put my heart and soul into a business, I won’t be part of…you can’t expect me to put this company above my family if you don’t respect me enough to give me the top job. (It’s one thing when I demand our employees put LVLT ahead of all else, but it’s quite another when it’s me.)

    But let’s face it, if the board intended to select me, they’d have done it with this announcement. I certainly didn’t take this job with the intent of being passed over for the CEO position and I certaintly didn’t take this job to be some new CEO’s number 2.

  • B says:

    Kevin O’Hara merges Integra with Level 3 and becomes the CEO. He took one for JC, when it should have been JC…

    But, the company may be better with outside blood and a new way of approaching the sales verticals. They need more sales & revenue – somebody that can accelerate the revenue process so the stock price can elevate. Investors have waited way too long….

    The “JS id” was funny, probably what he is really thinking.

  • CarlK's dog says: says:

    PLEASE RESQ ME. This guy’s a fruitloop.

    • Carlk Translator says:

      Translation:

      Sometimes i don’t respond to being hit with a stick. Sometimes i respond by biting. Either way if he continues to act this way i am going to make sure he is sorry.

  • Anonymous says:

    KOH returns ? now that is a humerous post. Do you think he would retain Sunit and Jeff Storey as part of his leadership team.

  • Anonymous says:

    A question for the group.

    Do you think that it is tell that Jeff Storey was not named CEO in the announcement of Jim Crowe stepping down and he will not be elevated. Or would you interpret that as a public perception move suggested that all options are being explored but likely Storey is named as CEO.

    Also internally and historically are CFO like Sunit Patel considered for CEO type roles or do you think there skillset doesnt translate over to the CEO type role.

    Really trying to understand if at all possible what may happen with Level 3. New CEO may/likely means new COO which then means the assembled leadership at SVP level starts to be dismantled and one enormous overhaul starts. Not a bad thing in my mind and what I think needs to happen

    • Grant Lewis says:

      It is interesting to say that Jeff Storey wasn’t announced as CEO to setup the transition. It could be that they just don’t see his departure at the year end as requiring the immediate announcement of a previously identified successor. It also may mean that they have a lower degree of confidence with Jeff Storey at this point based upon internal interviewing of the senior leadership team whereby the other members of the ELT are not advocating strongly for him.

      It would not be the first time something like this can happen. XO had Carl Grivner as the CEO with the previously identified successor as Dan Wager, former President of Business Services. When the board spoke with the other executives they all communicated that they could not work with Dan Wagner therefore the board moved in a different direction. Sadly, that was not the boards first mistake and it hasn’t been the last because Dan Wagner had proven he could grow the company and had done so for 2 years straight. That didn’t matter because the board felt chemistry was more important so voila.

      Its still many months away before they have to name a permanent replacement. Its entirely possible that Jeff’s already the guy … but part of me feels that there’s a chance he won’t be due to the lack of inaction on the part of the board … or action depending upon how you look at it. In the end, time will prove whether or not he is selected.

    • I think it’s too early to say. If one takes the position that the timing of this announcement is to satisfy those increasingly impatient investors that something is being done prior to the annual meeting and Q1’s usually weaker results, then even if you wanted to elevate Storey to CEO you’d wait a while and go through a process first. Fewer easy targets to aim at that way. If the year goes well, then Storey’s star will be in the ascendant. If not, then the board can take a more dramatic path.

  • I Warn You This is a Rant (IWYTIAR) says:

    Rob, it’s too early to say? That statement amazes me. He’s out, he failed. The only shameful part of this story is that the board lacks the strength of character, leadership, vision and initiative to take immediate action, presumably out of fear that the market will punish the stock. In a more ideal world — like the one studied in capitalism textbooks and superficially embraced by executives when talking to employees — the market would punish the stock now because, apparently, this board was so ill-prepared for this moment and, based on its announcement, will take up to another 9 months (end of ’13) to figure it out.

    If I were SEAM or some other activist shareholder, I’d demand to know how this board spends its time? Two LVLT board members, Jaros and Mahoney, are listed as having years of experience in succession planning.

    The punchline, of course, is that the board mollycoddles executives who according to last year’s def-proxy were granted, among other perks, 2 year salary and 2 year bonus severance packages for even voluntary termination — sorry Jeff Storey’s Id, it appears an even bigger retention package will be necessary to keep Jeff around for the next CEO announcement and still more for the transition.

    Meanwhile, the LVLT executives ruthlessly release droves of employees with paltry severance packages, announce office closures with Broomfield or bust options without relocation packages, cutback bonuses, and develop employee rating performance scales where the highest rungs can’t possibly be attained.

    At the same time, employees and shareholders constantly pay for the sins of failed leadership. Guaranteeing executives severance packages equivalent to 3-4 years salary while sending off most employees with less than 6 months salary (no bonus) turns capitalism on its head.

    LVLT executives are already incentivized with large RSU & option grants and bonus payouts. Why do they deserve a big smooch when they leave also?

    If ever an employee class deserves the smallest severance payout package, executives would be it. Perpetuating this crazy structure is HR specialists. If you ask a human resources consultant about sweetheart executive severance packages, they’ll tell you it’s what all corporations do and it’s what’s required to attract talent. Is it? Please point me to the empirical studies showing that aspiring executives turn down executive appointments because the severance package isn’t that attractive?

    In truth the HR specialists are merely independent justification or cover for granting overly generous executive severance packages. These packages are outrageously generous because boards are made up of executives (or former executives) at other companies who have (or had) similar sweetheart deals they don’t want to see touched.

    This fantasy that capitalism is ruthless applies in the private sector for employees, perhaps, but not executives. The first step, among many others necessary to improve this company and countless others like it, is to eliminate executive severance. Take away that soft landing executives are guaranteed and watch executives run this company like a family business with family money at stake rather than like a state-run enterprise using other people’s money.

    • Grant Lewis says:

      You make a good point in that the BOD should be punished by way of stock market reaction on this stock for lack of action. Candidly, i believe its somewhere in the middle of the BOD not believing Jeff is the right person and confidentially talking to other interested parties and attempting to strike a balance b/w the large institutional investors to not force them to dump all their shares b/c the BOD is ineffective while they work to address what is clearly a leadership gap. Either way I think Rob is off base on this one … i think they should have been definitive and deliberate in making the successor announcement and therefore have failed the primary constituents they serve – employees and shareholders.

  • thinkith says:

    In my view, thinking Crowe’s departure was voluntary, or the BOD MAY not be satified with Storey as successor CEO is mistaken. Crowe was forced out by the larger shareholders. Saying he’ll be around to YE or sooner, means when they find a replacement he’ll be gone.

    I’m not sure where J. Storey fits in. I suspect he’ll be a consideration, or at least they are telling him that, but obviously it isn’t a given. More importantly, we must alos consider the change at last year’s ASM where all members of the BOD are up for reelection this year. ( That wasn’t an accident in my view). That was a warning to Board members.

    Make no mistake, what used to be controlled by internal management is now clearly controlled by the large shareholders. They’ve been patient but no longer so.

  • Anonymous says:

    Outside of being a great banker and a decent visionary back in the 90’s, Mr Crowe and his Omaha friends have miserably failed the shareholders. With that said, it is amazing that Jim and Sunit along with Sureel and KOH back in the day, have kept lvlt out of BK.

    As far as Storey is concerned, I doubt he is in the running. He seems to be a good enough guy, but he has not been able to change the company’s trajectory as he set out to do after being in his position the last few years. He’s basically another old school manager with good intentions, but not the right skill set for the job. Jeff was never the right guy to change the company and Jim should never have sent the jet in the first place to be his right hand man, but I guess he was desperate. I have to think the board is looking at the company’s results under Jeff’s leadership and saying Jeff hasn’t brought the change needed over the last few years, so why is he going to be able to do anything different moving forward? As others stated, he’ll get his chance, but I think he should be happy if he gets to stay in his role.

    Level3 is a complex beast, but I can only imagine that a new outside leader with strong existing level 3 leiutenants can get the job done. This change has been needed for a long time.

  • Anonymous says:

    Time for Legere, Barua and Breauninger to take over.

    • Anonymous says:

      Are you kidding? Legere’s making 100+ million annually working for T-mobile. Baby boy barua is on the west coast working for a VC / PE firm and being heavily recruited by his dad – JJL – to go back to the nipple – i mean well to work for T-mobile. And Gary B. is biding his time for a better job …. just waiting to see what happens. Everyone knows he and storey do not get along … but he’s not walking out on his significant salary unless they fire him and trigger a nice golden parachute. so keep dreaming !

      • anon anon says:

        all great points, but let’s not forget the most important, they didn’t create any shareholder value while running Global Crossing.

        • Anonymous says:

          Seems to me like people don’t want to give credit where credit is do. Legere took a bankrupt company over on the brink of liquidation, turned it around over extremely painful but necessary changes, then proceeded to establish growth over a period of several years. He didn’t cause the situation the company was in when he took it over, rather he prevented it from being completely liquidated.

          Say what you want, think what you feel, but its obvious your ignorant when it comes to what he did. Quite frankly while i was at business school we talked about how bad the management was that caused the company to go into BK. We then spoke about how legere saved the business – albeit in ways that i don’t truly understand – but he saved it. Then, he sold it to L3! You want to talk about shareholder value – or lack thereof – what has L3 done except completely do the opposite of what any good leader would ever do? Crowe is a nice guy, but he got pushed out due to low EV. Storey is a moron – plain and simple.

          • anon anon says:

            First, I’d like to know what b-school is lionizing John Legere. I’d have to say that if John Legere is one of the best CEO examples our b-schools can point to for exceptional leadership, than it’s no wonder the quality of b-school education has declined since I was there.

            Second, let’s get your chronology right. John Legere didn’t take a bankrupt company over. He took the company into BK. That said, given the company’s financial position when he arrived in Oct 2001, bk was probably inevitable. (He was CEO when GC filed for BK in Jan 2002.) Disturbingly though when Legere joined Global Crossing from Asia Global Crossing in Oct 2001, he told GC employees on an all employee call that GC would not file for BK which turned out to be total BS, even though that question had been directly asked on the call. (You could argue how else should he have answered that question, but there are other, higher integrity ways to answer that question without outright lying to the rank and file as he did.)

            But I always get a kick out of Legere Lovers (LLs) who ignore the fact that Asia Global Crossing, where he was the only CEO, filed for Chapter 11 shortly after he left. So LLs say he had nothing to do with the GC’s Chapter 11 because he inherited a POS, but, at the same time, Legere had nothing to do with AGC’s Chapter 11 because he wasn’t there when they actually filed for Chapter 11 even though it happened within 3 months of his departure. (Can’t have it both ways. He’s responsible either for GC’s BK or for AGC’s BK but neither? Don’t see how that’s possible. That people discount or disregard AGC’s BK while exempting him from any blame for GC’s BK demonstrates just how teflon John Legere is..

            As for his post-bk feats, I don’t really see them either. GC emerged from BK in Jan ’04 at $30/share and a clean balance sheet with only $200m in debt (down from $6b pre-BK) and was sold 7.5 years later at $24/share with $1.4b in debt. Most telling about his great shareholder value creation is that the day before the LVLT announcement GLBC stock traded at $14/share. In fact, the median and average stock price of GLBC post BK (Jan ’04- Apr ’11) was 14.25 and 14.55, respectively, meaning during the life of Legere’s stewardship, on average, he destroyed shareholder value.

            In the end GC was never as valuable under his leadership as it was when it had been announced it had been sold to different owners.

            This much can be said about him, John Legere did master the art of creating personal wealth, earning a cool $60m on the LVLT transaction. Meanwhile, STT remains stuck with LVLT shares it can’t monetize without sending the stock tumbling.

            • Anonymous says:

              the company would have been liquidated had he not been the leader. like i said you are a moron. you don’t know squat. back seat drivers …. always think they know … they don’t.

              • another anon says:

                so, your point is John Legere was the only individual who could save the company from liquidation? Can you support that with a single fact? That is a very strange comment because how can you possibly prove that no other individual could have saved the company from liquidation? I recommend you read up on the logical fallacy of proving a negative.

                There’s more facts presented in Anon Anon’s comment than yours. Instead of countering the claims, you simply attack the commenter as if that explains anything. It doesn’t.

                Is it your position that anyone who doesn’t share your admiration for John Legere must be a moron?

              • anonII says:

                you call anon anon a moron, but you, candidly, admit above that you don’t even understand how legere, supposedly, saved the company.

                “We then spoke about how legere saved the business – albeit in ways that i don’t truly understand – but he saved it.”

                Who’s the moron? How do you support a conclusion when, admittedly, you don’t understand the foundation on which it was built?

  • anon anon says:

    Move on? I didn’t bring up the self-absorbed CEO. That was you. I simply responded, highlighting some uncomfortable facts people like you haven’t come to terms with.

    • Fred says:

      Wow .. sounds like anon anon was personally affected by Legere. At this point it really doesn’t matter as Legere isn’t at L3 and is now responsible for tmobile.

      All that said, that doesn’t change the fact that Level 3 is in a precarious place. Its going to have to really do some things that will regain investor confidence b/c up to now the leadership hasn’t. And i think that is precisely why storey won’t get the nod for CEO.

      What does the future hold for Level 3? Possibly a lot more if the leadership is changed out … sometimes it takes a step change to effectuate change. I don’t think that what Level 3 has done up to now is anything remarkable except convince its bond holders to keep waiting.

  • Santayana says:

    ah yes, the great and powerful John Legere. I remember him dearly. Great interpersonal skills distract others — employees, board members, analysts and bankers — from a lot of sins. None of what I read about him above comes as a shock, including those who want to praise him. The LA Times 2003 piece appears to serve as a mere overture to his following acts of self-enrichment. Not sure I’d want him in my foxhole, but, if stuck with him, wouldn’t mind him as the spokesman once we got captured. (Just make sure your interests are completely aligned before he starts talking.)

    http://articles.latimes.com/2003/oct/12/business/fi-legere12

    • Hilarious satire says:

      Love it.

    • Anonymous says:

      if its written in the paper it must be true!

      • anonII says:

        Gotta love the non-denial denial. You don’t have to say something is false, only that the medium through which it was told is not always right and, magically, it is false.

        I’m guessing you don’t read many newspapers. Where does someone like you get their information?

        • Anonymous says:

          now the board has psycho-analysis. Rob sure does run a swell site. Gosh people who cares? Level 3 is a dump. I have to go take …

  • TiredTelco says:

    I suppose after 15 yrs of a dog not turning a profit i’d take my money and run too. It is and always will be a churn shop….duck tape it all together and just hope it keeps rolling down the hill….Directors and above wearing rose colored glasses and everyone else below is living in hell…been the culture from day one

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