Covad Gets New CEOCovad Gets New CEO

Good help is hard to find, but after a six-month search, digital-subscriber-line service provider Covad Communications Co., believes it has found the right man to lead the company to profitability.

Covad's board of directors will appoint Charles E. Hoffman as president and CEO of the financially struggling wholesale DSL provider. Hoffman is expected to handle the day-to-day management of the company, including executing a strategy to raise cash. "We've got to raise $400 million to $700 million in capital by the second quarter to get to profitability," says Chuck McMinn, chairman of the board.

Given the shaky economic conditions of the DSL market for both consumers and wholesale providers, Hoffman is facing a great challenge, say industry analysts. Covad must find a way to streamline operational costs and garner additional revenue-building opportunities, says Giga Information Group research fellow Lisa Pierce. "The question for Hoffman is how to get their internal operations improved in a way that costs and time-to-install are improved," Pierce says.

Hoffman, who most recently served as president and CEO of Rogers Wireless Communications in Canada and served two years as president of the Northeast region for Sprint PCS, needs strong negotiation skills and cost-cutting strategies to be an effective player on Covad's team, says Gartner VP Kathie Hackler. "Hopefully he'll concentrate on moving to profitability quickly before they run out of money," Hackler says. Generating additional revenue by focusing on profitable customers or turning to venture capitalists, she adds, are initiatives Covad's new leader will have to take to turn the company around.

Once Hoffman officially assumes the role on June 25, interim CEO Frank Marshall will resign and serve as vice chairman of the board of directors. Marshall stepped into the interim position last November when former CEO Robert Knowling resigned after the company's stock was hammered following disappointing earnings news and reports that Covad was owed millions by customers who couldn't pay their debts. Covad's stock is currently trading around $1.