Executive Changes at Level 3 Are More about Timing than an Actual War

Implications: 1.      In prior years, Level 3 turned out to be high on its projections. 2.      But the service provider now is at a critical time in its history. 3.      Level 3 can no longer afford to be off on its prognostications.

Analysis:  The shuffling of executives at Level 3 really has to be viewed in the context of the entire reorganization that has been taking place at the carrier for about the last three or four months.  It is not a matter of just one spot being affected.  People are being moved around or let go in the organization in every single department.  In fact, it has had a salutary effect for some supervisors who have been hammered with an overabundance of work.  These situations have become more manageable by saving certain individuals who were initially laid off.  

It seems that Patel was originally going to leave because he was to be the casualty for evidently putting up numbers in a particular quarter that the company missed.  Now in the last quarter, O’Hare was seen as the portrayer of expectations that were off the mark – and so he became the scapegoat.  All in all, it appears more a matter of who was going to take the fall at a particular time.  Both Crowe and O’Hare have had a good working relationship for many years.  And this notion that “O'Hara's departure [is all of a sudden] an admission that the acquisition strategy, which carried so much of Level 3's growth plans, was a failure” – is nonsensical.  

  In addition, Crowe wanted to keep Patel because he probably could not find anyone to replace him.  With a company like Level 3, debt is a good way to leverage the business overall because of the huge amount of capital required to continue to grow.  It is not as if the carrier can just stop investing.  Patel excels at managing financial instruments to obtain lower cost debt as older debt at higher interest rates gets retired.