Schneider's surprise exit comes as cabler posts record losses
AMSTERDAM — United Pan-Europe Communications chairman-CEO Mark Schneider resigned Tuesday as the giant cabler posted a hefty $1.3 billion loss for the first half and said it’s planning to lay off up to 1,500 workers by the end of the year.
Schneider, 46, who’s been helming the company for five years and helped take it public, said he wants to spend more time with his family in the U.S.
UPC will look both inhouse and outside for his replacement, who will face a company with a decimated stock price and a heavy debt load from acquisitions and investment in new services. The new CEO will also be seeing a lot of John Malone when Denver-based Liberty Media closes on a deal that will give it control of UPC’s parent, UnitedGlobalCom.
Schneider has agreed to stay on until a successor is found and will also become a member of UPC’s advisory board. Schneider has helped lead UPC from its founding in 1995 as a joint venture between Philips Electronics and UnitedGlobalCom, which is also based in Denver.
UnitedGlobalCom, which is run by Schneider’s father, Gene Schneider, later bought out Philips and took UPC public in 1999.
UPC’s revenue for the first six months of the year surged 58% to $620 million, which execs called unprecedented growth.
Over the past year, however, UPC’s stock has dropped 95% in value and risks being delisted. Its debt swelled to nearly $8 billion, largely due to Schneider’s ambitious acquisition program, which built UPC into Europe’s largest cabler.
The exec sought to add subscribers by buying up cable systems in 17 territories across Europe. UPC now accounts for more than 10% of the European cable market with over 7 million customers. Cable revenue rose to $523 million from $366 million. Sales for content and services, which include broadband Internet service provider Chello, tripled to $188 million.
But UPC has $3.6 billion in loans tied to hitting performance targets, and the slow uptake of its digital TV platform has analysts worried.
The company launched its digital service last October and so far has only 42,000 subs. It will roll out in Holland, Austria, France, Sweden and Norway next month with a target of 250,000 subs by the end of 2001. But UPC has begun backpedaling on its target, emphasizing that it will not sacrifice quality for reach.
UPC shares fell 2.7% in New York trading Tuesday to $1.08.
Parent UnitedGlobalCom sank 2.5% to $6.21. Besides UPC, UnitedGlobalCom owns cabler Austar United Communications in Australia and New Zealand, and VTR GlobalCom, the largest broadband communications provider in Chile.
The company’s revenue rose to $794 million from $5584 million in the first half. Net losses ballooned to $1.5 billion from $531 million.
(Erich Boehm in London and Jill Goldsmith in New York contributed to this report.)