Will reversal of fortune
be Down Under?
By Al Lewis, Business Columnist
Friday, June 10, 2005
Australia's largest phone company, Telstra, said it will pay former US West CEO Sol Trujillo up to $7.7 million a year to lead it into the future.
What about the past?
Trujillo, 53, spent nearly 26 years at US West, which may have been the lousiest telephone company in the United States.
Trujillo, who ultimately became chairman and CEO, ran a company that could not keep up with the fast population growth in its service areas. In fact, it was widely known as US Worst.
As deregulation and technology provoked competition, Trujillo prepared the company for sale. In 1999, he proposed selling it for stock to Global Crossing - which later fell headlong into bankruptcy when the telecom bubble burst. Instead, Trujillo sold US West to Denver-based Qwest for stock that turned out to be hyped with accounting tricks.
Mimi Hull, president of the Association of US West Retirees, blames Trujillo in part for the company's precipitous downturn. She says he should have known Qwest was the product of a precarious stock-market bubble and would be a bad deal for long-term stockholders.
"He talks big all the time, and, in my opinion, doesn't ever deliver," Hull said.
Trujillo walked away from the US West-Qwest merger with $71 million in cash and perks. Not a bad take for a guy who ran a regulated monopoly with a guaranteed rate of return.
"I credit him for dressing up Qwest to sell it," said Donna Jaegers of Denver-based Janco Partners. "But he didn't help out anybody who was a long-term shareholder."
I was unable to reach Trujillo on Thursday. His longtime friend and associate, Phil Burgess, told me Qwest's implosion did not happen during Trujillo's watch.
"Sol left them a company that was in good working order, leading the field in innovation, and having huge increases in J.D. Power (quality surveys) and other measures of customer service," Burgess said. "Everything was on the uptick. What happened afterwards is properly not laid at his doorstop."
Trujillo left Qwest and took a low-profile job as CEO of a San Diego technology startup in November 2000. The company, which drew venture capital from the CIA (yes, the spy agency), was called graviton. It used all lower-case letters in its name - which was just as well because it didn't succeed with its capital.
In 2003, Trujillo became CEO of Orange, one of the largest cellular phone companies in Europe. His job at this subsidiary of France Telecom lasted 13 months. There were reports of clashes between Trujillo and France Telecom chairman Thierry Breton. But in the end, the company said Trujillo had "successfully overseen a major programme of organisational and management change." Whatever that means.
"Sol was the least bad of the last five CEOs at Qwest," including current CEO Richard Notebaert and former CEO Joe Nacchio, said Denver telecom analyst Tom Friedberg, who used to work at US West. "And the most important thing about being the CEO of a Bell is to engage in meaningless platitudes and have a core of Teflon."
Hispanic Business magazine once ranked Trujillo among the 100 most influential Hispanics in the country. Trujillo has served as a trade adviser to President Bush. He is on the boards of PepsiCo, Target, business technology giant EDS and Gannett, which owns USA Today.
At Telstra, Trujillo will lead the company from a half-government-owned operation to a fully private enterprise. Australia is deregulating telecommunications, just like the United States. Never mind that US West was hardly a winner in the deregulation battle here.
"We believe he truly meets the exacting criteria set down by the board for the task ahead," Telstra chairman Donald McGauchie said. "During his career, he has successfully managed fixed-line, wireless, broadband and directory businesses - virtually every facet of Telstra's business.
"He has enormous depth, expertise and understanding in matters regulatory, operational, financial, marketing and sales, and a deep understanding of technology."
It looks like Trujillo is not going down. He's going Down Under.
Al Lewis' column appears Sundays, Tuesdays and Fridays. Respond to Al at denverpostbloghouse.com/lewis, 303-820-1967, or email@example.com.