The trials and tribulations of Leap Wireless International Inc. continued last week as the company promoted a pair of executives to fill in for the loss of a long-time leader and announced a new fulfillment and logistic service provider for its Cricket Communications Inc. subsidiary after the former provider said it would not continue to provide services after the current agreement ends next month.
The executive changes included promoting Doug Hutcheson to executive vice president and chief financial officer, as well as Glenn Umetsu to executive vice president and chief operating officer. Hutcheson previously served as Leap’s senior vice president and CFO prior to the promotion, while Umetsu was Leap’s senior VP of engineering operations.
Leap, which emerged from bankruptcy protection last October after shedding nearly $2 billion in long-term debt, reported Jan. 9 that President and COO Susan Swenson had voluntarily resigned her position as an officer and director of the company to pursue other interests. The company is operating without a president.
Leap said the executive promotions were “in alignment with the company’s recently confirmed reorganization process and plans to improve the financial and operational performance of its business.”
“Both Glenn and Doug understand the bottom-line goals of the business and are ideal individuals to lead the company’s financial and operational efforts,” said Harvey White, Leap chairman and chief executive officer, who announced last September his intentions to retire his CEO position.
Leap’s search for a new CEO was originally expected to take four months, with Leap spokesman Jim Seines saying last week that the company is still working through the selection process.
Leap also reported a new agreement with Brightpoint Inc.’s Brightpoint North America L.P. subsidiary to provide integrated logistic services to Leap’s Cricket wireless service operations following an earlier announcement from former provider CellStar Corp. that it would no longer provide such services to Cricket after their current agreement expires next month.
While financial terms of the new agreement were not released, Leap said Brightpoint would provide inventory management, product fulfillment and distribution, returns management and credit management services.
Citing diminishing returns, CellStar President and COO Robert Kaiser noted the decision to end its relationship with Leap was “best for our company and our shareholders.”
“Unfortunately, the pricing which Cricket requested going forward would not have supported our key profitability strategy,” Kaiser said. “We have committed to our stockholders that we will continue to operate profitability by fostering relationships that are win-win for both parties without compromising our quality of service.”
CellStar said Cricket accounted for approximately 11 percent of its consolidated revenues in 2002 and 6 percent of revenues last year, adding that due to several fee reductions and volume decreases, net earnings on the account have steadily declined since 1999. The loss of the Cricket account is expected to cut between 3 cents and 5 cents per share from CellStar’s fiscal 2004 earnings.
