Capellas called a good fit for WorldCom

Financially embattled WorldCom might be taking a gamble choosing a CEO with no telecom experience, but experts say a fresh outlook could be just what the company needs.

The optimists see that gamble paying off with the emergence of a more customer-focused company that plans to be a role model for business integrity, instead of a poster child for corporate misconduct.

The carrier on Friday named Michael Capellas as its chairman and CEO, nine weeks after announcing intentions to search for a new boss. Capellas was most recently president at Hewlett-Packard and CEO of Compaq before that company's merger with HP. He resigned from HP last week.

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Financially embattled WorldCom might be taking a gamble choosing a CEO with no telecom experience, but experts say a fresh outlook could be just what the company needs.

The optimists see that gamble paying off with the emergence of a more customer-focused company that plans to be a role model for business integrity, instead of a poster child for corporate misconduct.

The carrier on Friday named Michael Capellas as its chairman and CEO, nine weeks after announcing intentions to search for a new boss. Capellas was most recently president at Hewlett-Packard and CEO of Compaq before that company's merger with HP. He resigned from HP last week.

Capellas says he feels an "enormous sense of responsibility" to bring back trust and integrity to WorldCom. "I have thought about that a lot...and it will affect my actions. It will be a great thing to get this company back on track," he says.

WorldCom has been under a Securities and Exchange Commission investigation for nearly four months over billions of dollars worth of allegedly fraudulent bookkeeping.

While Capellas has 26 years of experience in the IT industry, none have been in telecom.

"At least he isn't tainted by scandal, but on the other hand, selling PCs and servers is a far cry from T-1s and IP VPNs," says Steven Harris, an analyst with IDC. "It's not only a different kind of product and revenue stream, but a new kind of technology to learn - packets and frames instead of ones and zeros."

"Clients I've spoken with are concerned about the lack of telecom service provider experience," says Lisa Pierce, an analyst at Giga Information Group.

However, customers are more concerned with how WorldCom will emerge from bankruptcy, Pierce adds.

"There is no question that WorldCom will shed some assets and business customers recognize this," she says. "They worry more about the prospect of WorldCom possibly selling the data and IP business to an incumbent local exchange carrier . . . or that it will exit a major geographic region such as Western Europe. Any of these scenarios are viewed as highly disruptive."

Capellas is trying to squelch those fears.

"There is no intention of breaking up the company and selling parts," he says. "I would not have taken the job if we were not coming out of bankruptcy. My goal is to come out of bankruptcy intact and move forward."

According to those who know him, Capellas couldn't be more different than Bernie Ebbers, who headed up WorldCom until April. Ebbers often was criticized for his indifference toward customer-care issues and a disdain toward the media. Capellas, on the other hand, says he will emphasize "the importance [of WorldCom's] existing customers" and told the press he would offer "direct answers to direct questions."

His first plans include face time with customers.

"We'll establish a customer advisory board of about 10 to 12 of the top accounts," he says. "This will be our vehicle to communicate with them."

Capellas also plans to take to the road.

"I'll be visiting [customers] one by one," he says. "There's something about the personal touch . . . there will be a lot of attention to detail."