Skibo Resigns as US Sprint Prepares Huge Writedown : $350-Million Charge Stems from Outdated Facilities and $76 Million in Old, Uncollectible Customer Accounts

Charles M. Skibo has resigned as president of US Sprint, the nation’s third-largest long-distance telephone company said Thursday.

The money-losing firm, a joint venture between United Telecommunications and GTE Corp., also said it will record a one-time, $350-million pretax charge against earnings in its second quarter. The charge includes about $260 million to reflect the reduced value of outdated microwave transmission facilities being replaced by a new fiber-optic cable network that is nearing completion.

More unexpectedly, it also includes a $76-million allowance for uncollectible customer accounts arising from billing delays and other problems from consolidating the separate systems of the two partners when they merged last July.

To replace Skibo, the partners tapped veteran telephone industry manager Robert H. Snedaker, formerly vice chairman and chief operating officer of United Telecommunications, which has its headquarters in Kansas City, Mo.

No Link Drawn

GTE, based in Stamford, Conn., said its half of the charge will be partly offset by gains from a pension settlement that will reduce the after-tax charge to about $55 million. United Telecommunications said its share will reduce second-quarter earnings by $109 million.

Sprint spokesmen drew no link between the writedown and Skibo’s departure, which they portrayed as amicable and motivated by Skibo’s desire “to pursue other business interests.” But industry analysts took another view.

“There’s a definite link between the increase in the receivables and Skibo’s departure,” said Robert B. Morris III of Prudential-Bache Securities. “What they’re saying is that they have a major problem in the billing area and that ultimately the buck stops at the president’s desk and something should have been done about it.”

If so, Skibo’s departure may underline the seriousness with which management views the problems, but it could prove to be “penny wise and pound foolish,” Morris said. “The problems could have been resolved far less dramatically without losing the benefit of one of the very few experienced managers in the long-distance business.”

Skibo’s Work Praised

Skibo, a former MCI executive who left the No. 2 long-distance company to help revive a competitor, did not leave US Sprint without receiving praise.

“We owe him a great deal of thanks for the excellent start he has given this new company,” GTE Chief Executive Theodore F. Brophy and William T. Esrey, chief executive of United Telecommunications, said in a joint statement. “During the year US Sprint has been in operation, Mr. Skibo has given the company a new image, spurred its marketing effort and overseen the swift completion of its new fiber-optic network.”

Skibo, too, issued a statement praising Brophy, Esrey and his former US Sprint colleagues, predicting that “years from now, business schools will teach the US Sprint story as a case study in building a successful business.

“I am proud to have played a key role in building this outstanding company, and in working with the most fabulous people I’ve ever seen in American business,” Skibo said.

In naming Snedaker, the partners underlined his “38 years of telecommunications management experience in a wide variety of positions in the Bell System and at United Telecommunications.” This emphasis on management experience suggested to analyst Joe Bettipaglia of Gruntal & Co. that US Sprint has arrived at a “strategic decision point in terms of how quickly it wants to expand and whether a combination with MCI makes sense.”

(Spokesmen for both MCI and US Sprint regularly deny any interest in a merger, but their smaller competitors, which once were multiplying like rabbits, have more recently been dying like flies.)

Investment banker Bradford L. Peery, president of Brad Peery Inc. in Tiburon, Calif., similarly viewed Skibo as “basically a marketing guy who really had no managing experience,” especially in controlling costs. “He was the right guy at the right time, and the times have changed,” Peery said.

Break-Even Point

He predicted that US Sprint could break even within about 18 months if Snedaker can succeed in maintaining Skibo’s momentum in generating new revenue while chopping $800 million a year from operating costs. The venture will save about $500 million, he estimated, just by completing the shift to its fiber-optic network. This will enable it to abandon the patchwork system stitched together from United Telecommunications and GTE Sprint’s former networks along with additional lines leased from AT&T; and other carriers.

But Morris of Prudential-Bache remained skeptical whether Snedaker’s local telephone management experience will be transferable to the different economies of long-distance telecommunications. “You’ve lost that visionary force in the hopes of controlling costs,” he said.

Morris credited Skibo with managing to distinguish US Sprint’s product in terms of fiber-optic quality in an industry in which the only difference had been price.

“He could sell against an AT&T;, and particularly against an MCI, and say we’re better,” Morris said. “Not we’re cheaper but just flat-out better .”