Tellabs CEO resigns
Tellabs Inc. co-founder and Chairman Michael Birck found himself without a chief executive once again Thursday.
The first time was in 2002 when Richard Notebaert quit after less than two years to head Qwest Communications International Inc. Birck came out of retirement to lead the telecommunications equipment maker until Krish A. Prabhu was hired in February 2004.
Now Prabhu -- who lived in Dallas for the last 1½ years instead of near Tellabs' Naperville headquarters -- resigned Thursday, effective March 1, for personal reasons. It came about two weeks after Tellabs reported its third-quarter profit dropped again.
Birck said he will not take the helm this time.
"Krish has agreed to stay on board until we find a successor and that's already underway," Birck said. "But I'll continue to be involved."
Prabhu, 53, said in a statement Tellabs has increased its product portfolio, established new relationships with large service providers and continues to reposition itself. "This is the right time for a new leader to begin the next chapter at Tellabs," Prabhu said.
The struggling network equipment maker has been slicing its operations and workforce in recent years and Birck said more cuts are ahead.
Those struggles, a reflection of the telecom industry, were hard for everyone. So Prabhu's departure wasn't a surprise, Birck said.
"I really believe that the industry just beat him down," Brick said, noting Prabhu had high standards and expectations for himself.
Tellabs has been the subject of buyout rumors among Wall Street analysts, with Ericsson, Nortel Networks and Motorola as potential suitors. Company officials continue to decline to discuss any possible deals.
The timing of Prabhu's departure is unfortunate considering the company continues to restructure and he won't see all of those efforts through to the end, Morningstar analyst Jordan Zounis said.
"It remains to be seen if his departure will impact the company in the long term," Zounis said.
In addition, Tellabs said Thursday it intends to pump $600 million more into its common stock repurchase program, in addition to a remaining $176.1 million authorized in July 2006.
The departure of Prabhu could on the surface indicate Tellabs was on the block. But the increased stock buyback program signaled otherwise, said Zounis.
"A buyback of this much stock would dismiss any near-term buyout of the company," Zounis said.
Prabhu, a former venture capitalist and chief executive officer of Alcatel USA, had joined Tellabs at a time when it was attempting to re-emerge as a telecom front-runner. But it has continued to cut staff, sell plants and revamp its network equipment.
Taking command of Tellabs also meant leaving Morgenthaler Ventures, a technology venture capital firm, and moving wife Shuba and their three children from Dallas to a new home in Aurora. That homestead didn't last long and Prabhu preferred to work from Dallas.
Birck said he wants the next CEO to live near the Naperville headquarters.
"Krish has been living in Texas for the last 18 months and we felt that was not the optimal situation," said Birck.
He and the board hope to consider internal and external candidates, especially those who are part of this generation's technology, Birck said.
"Maybe with the things that the industry has brought in the last 10 to 15 years and what it's demanded, we'll need someone with direct employment experience with these times," Birck said.