Charter fires execs, revises revenue forecast

ST. LOUIS -- Charter Communications Inc., the nation's third-largest cable television company, said Monday it has fired two of its top executives amid an unfolding federal grand jury probe of its accounting practices.

In announcing the ouster of its chief financial officer and chief operating officer, the St. Louis-based company also said it expects fourth-quarter revenue growth to be at or near the low end of its earlier target of 8 percent to 9 percent.

Charter also said its fourth-quarter operating cash flow would be less than its previous guidance. The company is in the process of restating its 2000 and 2001 results.

In a statement, Charter said ousted CFO Kent Kalkwarf will be replaced on an interim basis by Steven Schumm, an executive vice president and the company's chief administrative officer.

David Barford, the COO placed on paid leave in October, has been replaced by Maggie Bellville, who joined Charter this month as executive vice president of operations.

Kalkwarf and Barford had their positions since mid-2000.

Charter has about 6.7 million customers in 40 states and is controlled by Microsoft Corp. co-founder Paul Allen.

Company spokesman David Andersen said that in light of issues raised by the grand jury investigation and Charter's own review, "regardless of the outcome these changes were appropriate."

"The board is committed to taking all corrective action appropriate to position the company to move its business forward and to move ahead without distraction," he said.

Charter said the government has told it that no one on the company's board, including president and chief executive Carl Vogel, is a target of the investigation.

Shares of Charter fell 2 cents, or 1.8 percent, to close at $1.17 in trading Monday on the Nasdaq Stock Market, before gaining a penny in after-hours trading.

The shares peaked at $22 per share in August 2001 but have been pummeled amid Wall Street concerns about the company's debt, the grand jury inquiry and shareholder lawsuits.

Ted Henderson, a Denver-based cable industry analyst, said the executive shakeup appeared "intended to show the grand jury that, 'at Charter, we're not going to tolerate this, and we're fixing these procedures."'

"That's the problem with this -- it's all speculation," said Henderson, of Stifel, Nicolaus & Co. At Charter, "I think there's either a siege mentality or a fresh-start one -- one of the two."

Charter said Monday the restatements of 2000 and 2001, as well as the audit of 2002 results, should be completed by next year's first quarter. Accordingly, the company said it would not offer further specific guidance until completing the 2002 audit.

Earlier this month, Charter said it plans to streamline its operation in a move that will cost a "significant" number of workers their jobs, with most of the cuts to come from middle management.

On Monday, Andersen called the layoffs "pretty much a moving target," though the aggregate number of those affected should be released next week. Any related charges to the company would be announced in February, he said.

Charter said Monday its board has ordered the company to adopt a "rigorous corporate compliance program" that will include a new internal overseer, the establishment of a compliance hot line and the adoption of a "comprehensive, expanded employee code of conduct."

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Charter Communications: www.charter.com