By Michael Brooks

Former FirstEnergy CEO Anthony Alexander announced last week that he will retire and leave the company’s board of directors at the end of April, after only four months as the company’s executive chairman. The announcement came just before the company released its year-end earnings report, showing that it sustained a net loss in the fourth quarter of 2014.

Alexander, 63, stepped down as the company’s CEO on Jan. 1 and took the executive chairman title to serve as an advisor to new CEO Charles Jones, 59.

Jones began the company’s fourth-quarter earnings call last week by thanking Alexander.

“Tony guided our company through a dramatic expansion and navigated through one of the most challenging periods in the history of the utility industry,” Jones said. “We certainly wish him well as he begins this new chapter in his life and enjoys more time with his family.”

Alexander spent 43 years with FirstEnergy, beginning his career in the tax department of the company’s predecessor, Ohio Edison.

Another Lackluster Year

FirstEnergy reported a net loss of $306 million ($0.73/share) in the fourth quarter of 2014, compared to net income of $142 million ($0.34/share) for the same period in 2013. Profits for the year dropped 23.7% to $299 million ($0.71/share) from $392 million ($0.94/share), the company reported.

CFO Jim Pearson cited reduced margins on competitive operations and milder weather that drove down residential sales as two of the primary drivers for the drop.

The company’s operating earnings for 2014 were $2.56/share, on the low end of the range it projected a year ago. (See Reboot for FirstEnergy.)

Rate Cases, Rebound for Competitive Operations?

Despite the drop in earnings, Jones was optimistic about the company’s future.

The company is still in the midst of shifting focus from its unregulated FirstEnergy Solutions subsidiary to upgrading in regulated transmission and distribution, according to Jones.

“We continue to believe the initiatives that were put in place during 2014 laid the path for our future growth and success,” he said, citing pending rate filings. “The recent major storm events that have impacted FirstEnergy’s service territory have highlighted a need for hardening of our distribution systems.”

He also defended the company’s approach to its competitive business.

“I’ve been asked numerous times about the possibility of divesting this business,” Jones said of FES. “Frankly, at this point in time it doesn’t make sense, while we are at or hopefully near the bottom of the market, to sell these assets at the lowest value they will likely ever have. In addition, capacity market reforms and pending changes to the treatment of demand response are likely to provide near-term value for this business.”

UBS Reiterates Sell Rating

Some analysts are not so hopeful. Following the company’s earnings call, UBS Securities reiterated its sell rating on the company and lowered its projections for 2015 operating earnings to $2.53/share from $2.68.

UBS also said it was skeptical of Jones’ assertions that it would not unload its competitive business, saying Alexander’s departure means less board support for merchant operations.

“While there’s nothing to confirm our thoughts here yet, we suspect management could yet look to spin/sell the business later this year,” UBS said. “… We expect the writing will largely be on the wall well before November following the outcome of the Ohio [Electric Security Plan] and PJM capacity auction.”