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C&W boss quits before he starts
LONDON, England -- UK telecoms group Cable & Wireless said on Tuesday its chairman designate had decided to quit, just two weeks after the group unveiled a major restructuring plan to cut costs and rescue its slumping share price. David Nash, who was scheduled take over the chairmanship at the end of the year, announced his decision after meetings with shareholders -- many of whom have criticised C&W's management and have called for a shake-up. "As a result of these discussions, David Nash... has told the directors that he believes that, in the circumstances, it would be inappropriate for him to become chairman at the start of 2003," the company said in a statement. C&W's board is expected to look outside the company for a replacement for Nash, who joined the board in 1995 and was closely linked to Chief Executive Graham Wallace, the architect of the group's costly and ill-timed global expansion into the Web hosting business. C&W (CW) shares, which have lost more than half their value this year, were up 1.5 percent to 82.81 pence in early trading on Tuesday in London. The shares have been tumbling as the group faces increasing competition from other Web hosting companies in the U.S. and continental European. On November 13, the group announced the results of a two-month strategic review of its international operations. It called for the elimination of about 3,500 jobs and the closure of 19 of its 42 data centres in its Global division. C&W said the restructuring at the cash-strapped division would cost about £800 million ($1.27 billion) but save £400 million a year. The Global division -- which provides Web site hosting and data services to businesses -- will see its workforce reduced to 9,000 from 12,500 as the group exits domestic-based operations and focuses mainly on multinational companies. The new strategy was unveiled on the same day that C&W posted first-half earnings before deductions of £172 million, which were above analysts forecasts. The group wrote off £2.7 billion in goodwill -- the difference between the acquisition cost and current market value -- at the Global unit and said it would slash another £787 million from the value of its fixed assets. The Global division was created by Wallace, who spent $1 billion in the past year buying U.S. Web hosting firms Digital Island and Exodus. At the time, Wallace said the Web hosting market was expected to grow by 45 percent annually. However, the market collapsed when the Internet bubble burst and anticipated demand failed to materialise. However, Wallace said earlier this month that the Global division was still expected to turn a profit by March 2004. "These are tough measures in a tough market, but we are committed to achieving our cash flow target for Cable & Wireless Global," he said.
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