Charles Hoffman, who will leave his post as chief executive at Toronto-based Rogers Wireless Communications on June 25, will take the reins, replacing interim CEO Frank Marshall. Marshall will remain on the board as vice chairman.
Marshall replaced Robert Knowling Jr., who resigned in November after calling the Covad post "the hardest job I've ever had in my life."
Hoffman inherits a company mired in red ink and on the verge of being delisted from the Nasdaq exchange. Unless significant investment capital is raised, it is likely to run out of cash within the next year.
"I think the revenue growth is going fine, but there's a definite distribution challenge there," Hoffman said. "My biggest priority will be to convince the employees to hang in there while we sort out all the back-office issues, especially collecting fees and converting customers from those companies who have gone broke."
Some analysts say Covad's lengthy search process may have paid off.
"I am really impressed Covad got someone of his quality. He knows how to do what he must do at Covad," said Don Sinsabaugh, an analyst at Punk Ziegel & Co. "In the past two years, he raised more than $1 billion in cash for Rogers and took it from No. 4 to No. 1 among Canadian wireless companies.
"He's basically going to be doing the same things he's been doing at Rogers for Covad now," he said. "I think this is a very good sign."
Hoffman said that although Covad's technology is sound and appreciated by its customers, the company will need to secure additional financing to stay afloat.
"Sure, we're going to need more financing," he said. "But there's a clear path to profitability there. In fact, (Covad) will reach profitability much faster than most of the wireless industry, which is going through some real tough times right now."
Last week, Covad received notice from the Nasdaq that it could be delisted from the exchange because it does not meet the minimum requirements for listing based on net assets and equity.
Covad said it intends to request a hearing before a Nasdaq panel to review the company's plan to achieve compliance. There is no assurance that the panel will grant its request for continued listing, the company said.
Covad, which missed the Securities and Exchange Commission's deadline for its 2000 annual report by almost two months, also said it would delay reporting its results for the March quarter until the week of June 18.
In the fiscal 2000 earnings report, Covad reported a $1.44 billion loss and said that auditors who helped prepare the financial results and annual report now rate the company a "going concern," accounting parlance that essentially means the company does not have enough cash to sustain operations for the next year.
Covad burned through more than $200 million in cash, down from $350 million last quarter, leaving it with $869 million in cash and short-term investments at year's end.
First Call consensus expects Covad to post a loss of $4.91 a share in fiscal 2001 and a loss of $3.60 a share in fiscal 2002.
Hoffman added that he accepted the position so that he and his family could return to the United States and because he "didn't want to be perceived as just a wireless guy."
Before joining Rogers Wireless Communications, Hoffman served as president of the Northeast region for wireless carrier Sprint PCS and spent 16 years at Southwestern Bell.
News.com's Corey Grice contributed to this report.