National Fiber Optic Network Provider
Survival Turnaround: Cutting Cost, Improving Service, Driving Sales
Bob Shingler was engaged by the Board of a publically-traded corporation to lead the turnaround of a $1 Billion revenue subsidiary that threatened to bring down the entire 100-year old enterprise. Over $2.5 Billion had been borrowed by the parent company to acquire the subsidiary three years prior, and the business was consuming almost $20 Million per month in cash operating losses. The lenders were threatening to not extend the debt which was due in six months unless the losses could be stopped before then. Investment bankers had advised the Board this was an impossible task and recommended a bankruptcy filing. Bankruptcy was not an acceptable solution for the Board, so alternatives were considered. Mr. Shingler was asked to present such an alternative, and obtained the Board’s support to lead an aggressive turnaround strategy that would bring the business to break-even while strengthening operations and allowing the business to become a viable acquisition target.
Mr. Shingler was appointed President of the subsidiary and immediately began to execute his plan to save the company. Unprofitable sales to smaller customers were halted and headcount to support the existing customer base was centralized. More profitable national account sales were emphasized and increased 43% in just six months. The net result: service response times improved by 65% even with a 40% reduction in headcount, overall revenue was maintained at around $700 Million, and SG&A savings of over $80 Million per annum were obtained. The effort that produced the most significant savings (over $11 Million per month) came from rationalization of unused network facilities. Several initiatives were launched to audit network efficiency and remove or replace unused or underutilized capacity.
This was a labor-intensive effort that required a seven-day-a-week effort to achieve the results required. It was the key to the company’s survival however, and Mr. Shingler took a hands-on approach working on a daily basis with the employees responsible for the endeavor. Honest communication of the enormity of the task, engaging all employees through “town hall” meetings and in smaller groups to communicate results, and listening to and implementing many of their suggestions resulted in the overwhelming success of the turnaround. The company was brought to breakeven within six months, received an unsolicited acquisition offer, and was successfully sold to new investors seven months after the turnaround plan was presented to the Board.