The bad news continued to flow at Charter Communications Inc. Monday, after the company said it fired its chief financial officer and made several moves tied to the ongoing investigation of the troubled MSO by a federal grand jury.
Charter said CFO Kent Kalkwarf, a longtime employee at the company, has been terminated by the board of directors and replaced in the interim by executive vice president and chief administrative officer Steve Schumm. The company added that it is conducting a search for a permanent CFO.
In addition, the company finally terminated former chief operating officer Dave Barford, who was placed on administrative leave in October. In releasing Barford, Charter also tweaked the title of recently hired (Dec. 4) executive VP of operations Maggie Bellville. Bellville's new title is executive VP and COO.
The moves come about two weeks after the company announced a sweeping restructuring, reorganizing its operations into five regional divisions and warning of substantial layoffs by the end of the year. Although the company hasn't yet released a figure for the layoffs, most industry observers believe they will involve between 1,000 and 1,500 employees.
Charter also said Monday that it would reaudit its books for the years 2001 and 2000, adding that revenue growth in the fourth quarter of 2002 will be on the low end of previous guidance of 8 percent to 9 percent.
The company also said cash-flow growth for the period will come in under previous guidance. Charter had earlier stated that it expected fourth-quarter cash-flow growth of between 4 percent and 5 percent.
Charter said the reaudits should be completed by the first quarter of 2003. The company added that it would issue no further earnings guidance until the audits are complete.
The changes were another blow to a company that has had a very bad year. Charter's stock has dropped more than 90 percent since Jan. 2, and the company has been rocked by heavy subscriber losses and questions about its accounting practices.
Charter stock was down 1 cent per share in morning trading Monday, to $1.12 each.
Once one of the highest-growth companies in the industry, Charter has lost 277,000 subscribers since Dec. 31, 2001. In August, the company revealed that it was the subject of a federal grand-jury investigation regarding its accounting practices, including the way it counts some subscribers.
In a prepared statement, Charter said the terminations followed a review by the company of various matters, including those relating to the grand-jury investigation.
The company reiterated its earlier claims that no member of its board of directors, including its CEO, is the target of the investigation. Charter is cooperating fully with the grand jury.
Kalkwarf started with Charter in 1995 as senior VP. He was named CFO in 2000, shortly after the company went public.
"These actions with respect to the management changes and the reaudit of the company's financials are necessary so that Charter Communications can move forward as we focus on building the company for the future," CEO Carl Vogel said in a prepared statement.
"The reaudits of the company's 2000 and 2001 financial statements, as well as the audit for 2002, will provide a clear picture of Charter Communications' financial position," he added. "This picture will enhance both our ability and flexibility in moving the company forward, particularly with respect to our balance sheet."
He continued, "We are moving as rapidly as practicable to ensure that Charter is on the right track. We intend to take the appropriate corrective actions, both operationally and financially, as we undertake strategic initiatives to capitalize on Charter's sizable market share and industry-leading technology."
The board of directors has also moved to create a corporate compliance program, including the appointment of a corporate compliance officer, the establishment of a compliance hotline and the adoption of a comprehensive expanded employee code of conduct.
In a prepared statement, the company said these measures are designed to ensure that Charter's employees, from top to bottom, will adhere to the highest standards.