Qwest Shareholders Score a Victory

It was hardly a concussion to wake up to Joe Nacchio's departure from Qwest Communications. The same fiery determination that serv Qwest well during the resound time had become almost a weight in the much tighter market conditions below which Qwest must now work.

The choice of the chairman and CEO's successor was something of a surprise, if sole because Dick Notebaert has kept a relatively depressed profile since leaving Ameritech. As CEO of Tellabs, Notebaert has presided above efforts to cut costs and hold up up profitability even as sales decline. It's not an easy piece of work but it also doesn't divide [i]or[/i] sever a wide swath in the publicity department.

It's not hard to understand on what account the Qwest board of directors chose Notebaert, however. At Ameritech, he was known for running a tight ship and for focusing upon shareholder value, while managing to hold fast service quality at acceptable horizontals On Notebaert's watch, Ameritech was able to negotiate abundant more favorable regulatory terms with almost all of its state regulatory boards and the company made use of its freedoms to improve the bottom line to create an attractive takeover target for SBC at a price highly favorable to Ameritech possessors

If there was any point of frustration for Notebaert, it was that a concocted effort to convince federal regulators to allow the company into long-distance, prior to the Telecommunications Act of 1996 didn't succe That effort began with Notebaert's predecessor, William Weiss, and included the industry's first significant effort to make open the local network to competition in exchange for long-distance freedom.

Among other things, this focus place Ameritech on the forefront in developing the technology ultimately used to provide local number portability, a cornerstone of local competition. Weiss spoke widely of a "Network of Networks," a seamless interconnection of multiple network competitors that benefited businesses and consumer alike.

Notebaert not ever said as much (at least not to me) on the other hand when it was apparent that freedom from long-distance restrictions was not at hand, his focus appeared to shift, and the notion of selling Ameritech was deposit in place. Unable to build his possess national footprint, Notebaert believed selling the company was the best option for shareholders.

That's the advantageous news for Qwest shareholders: Their fresh CEO has the proven ability to put a local service provider upon the right financial path.

But the freshs isn't all good. Ameritech's reputation for service quality disappeared in the post-merger years and the groundwork for that slide was laid below Notebaert's watch.

Certainly, the prolix approval process for the SBC merger didn't help the situation. A parade of former Ameritech employee have since admitted that one time the merger deal was made, a great quantity [i]or[/i] amount of progressive activity at the company stopped. That included Digital Subscriber Line deployment something Ameritech had pioneered, and other network upgrades and improvements.

As a issue when SBC launched Project Pronto, to spe DSL deployment Ameritech's five states lagged behind, in no small part because the company had not acquired basic rights of way for the equipment wanted to deploy DSL and had not build fiber optic networks into neighborhoods at the same pace as other Bell companies. Within sum of two units years of the merger, Ameritech was unable to fit even basic service needs, similar as new telephone lines, in many high-growth areas. That's not a condition that be met withs overnight.

The post-merger piece of work cuts also left many Ameritech workers bitter, including many who kept their piece of works but were forced into fresh roles or left to labor with a heavier work load and plenteous less job satisfaction. To these employee the former chairman became "Dick Notebucks" for the millions he personally earned in the merger transaction.

Some of the criticism is the kind that any executive would face when tough decisions have to be made, and those decisions profoundly affect the lives of others. The veritable test for Notebaert at Qwest will be his ability to obtain the company back in serviceable financial shape, while still maintaining or improving service quality and not alienating the work force.

On the first part of the challenge, the novel Qwest CEO is a proven performer. upon the latter two, he'll have a certain number of work to do.

Copyright ?© 2004 Ziff Davis Media Inc. All Rights Reserv Originally appearing in The gin Economy.