Toronto, - BCE, one of Canada's most widely-held stocks, rose $4.82 to $27.82 on a huge volume of 24 million shares after chairman and CEO Jean Monty resigned and BCE announced it is ending long-term support to troubled subsidiary Teleglobe Inc.
BCE's board immediately appointed Michael Sabia, president and chief operating officer of BCE and COO of Bell Canada, to succeed Monty as chief executive. Richard Currie, 64-year-old former chief of food giant George Weston Ltd., will be non-executive chairman.
Until today's announcements, BCE's normally stable stock price, had fallen nearly 30 per cent in recent weeks.
"A three- to four-dollar pop in BCE's share price may look encouraging, but look what the share price has done," said Katherine Beattie, senior technical analyst at Standard & Poor's MMS in Toronto.
"I mean, it's dropped from $30 to $23 in very little time. And with what's going on in the U.S. telecoms and what we've seen happen to their telecom stocks, I just don't see BCE turning around right now."
Before the markets opened, BCE warned of a writedown of at least $7.5 billion, primarily related to international long-distance subsidiary Teleglobe, and reported a first-quarter profit drop of 66 per cent to $301 million.
Monty, 54, is one of Canada's most prominent and successful business executives.
A former CEO of Nortel Networks, he took over as chief executive of BCE in 1998 and restructured the Montreal-based company from a slow-growth telecom firm into a multimedia giant with telecom, media, Internet and e-commerce businesses.
Currie told a news conference that Monty offered his resignation initially on Friday, at the first of several board meetings, and made the decision final late Tuesday.
"We did not accept it (on Friday)," Currie said, adding the board asked him to hear out their views on the issues first. "He arrived at his decision (Tuesday) that he did want to resign."
Currie said he thought Monty didn't want to face mounting unhappiness in the financial community, which has balked at the mounting costs associated with of BCE's diversification strategy in the last two years.
"Within the business he was almost revered," Currie said. "And outside the business he was running into increasing headwinds and I think he decided the headwinds on the outside were too much for him to overcome going forward and he wanted to pass the baton to Michael Sabia, who I would say would be Jean's protege."
Many analysts say the purchase of Teleglobe by BCE in late 2000 has been the undoing of the giant utility and led to Monty's resignation.
BCE announced it will end long-term support for Teleglobe Inc., limiting funding to between $100 million and $125 million US after pumping in $350 million US since December. As recently as December, Monty had said BCE was prepared to spent up to $500 million more this year to support Teleglobe.
Teleglobe, meanwhile, said in a separate release its has accepted the resignation of all BCE-affiliated board members and will pursue "a range of financial restructuring alternatives, potential partnerships and business combinations."
But it's not the only troubled spot for BCE. E-commerce division BCE Emergis reported Tuesday it lost $27.9 million in the first quarter as revenue declined 71/2 per cent to $132 million. Its shares gained 65 cents to $14.15.
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