NEW FOCAL CEO ACCEPTS DEPTH CHARGE

Focal Communications may have a new CEO, but the struggling CLEC is not promising a much different look under new management — primarily because company officials believe the key to success lies among Focal's existing customers.

Kathleen Perone, a two-year Focal board member who took the CEO post at the Chicago-based company last week from co-founder Robert Taylor, said she will focus on boosting revenue by gaining deeper traction with the company's highly desirable niche of Fortune 100 customers.

“We need to make sure we're getting all of their business in all of Focal's 23 markets,” said Perone. “Right now, it is more like they are buying one or two of our products in six or eight markets. We need to add more depth.”

Perone, who formerly headed bandwidth trader LighTrade, said she may bring more structure to the sales process to accomplish that but added that little else needs to be done differently at Focal. The company, like many CLECs, has teetered on the precipice of bankruptcy within the last year and has never earned a profit. Last year, the carrier erased $280 million in debt through a financial restructuring that gave bondholders a 35% stake in the company. More recently, it announced a 35-to-1 reverse stock split, but the success of both moves remains to be seen.

“We didn't do those things thinking we would see results in six months,” said Taylor, who will retain his chairman position at Focal. “These were long-term moves.”

Perone added that there is no pressure for her to come up with quick fixes. “It's not a matter of things being done differently. We have done a phenomenal job with our target customers, and we have moved into the government market.”

The management transition otherwise looks to be a smooth one. Perone said it was triggered by a plan for “Focal's next phase” that had been discussed by the board and executives since last year. Perone will keep her position on the company's board.

Further simplifying the transition is that Perone and Taylor have been friends for years since they both worked at MFS Communications in the 1990s. “That makes the transition much easier,” said Taylor.

There has been some speculation among industry watchers that Focal's weak stock price and its relationships with big enterprise customers have made the competitive service provider an acquisition prospect. Prior to last week's management change, the rumor mill had Focal potentially being acquired by fellow CLEC Allegiance Telecom.

Perone said a merger is not specifically part of Focal's “next-phase” plan but added, “I have been acquired four or five times with MFS and other companies, so I don't rule out anything. We're open to all possibilities as the future unfolds.”