Ed Mueller: The man who made the call to sell Qwest
June 6, 2010
When Ed Mueller took the helm at Qwest in August 2007, he was charged with leading a financially stable but unwanted company.
Like an ugly stepchild, the Denver-based company was overlooked. It missed out on the industry consolidation that helped the big — Verizon Communications and AT&T — get bigger.
Mueller had to grow revenue through existing operations — no easy task for a business caught in a seemingly never-ending storm of land-line cuts — or score an invitation to the mergers-and-acquisitions dance.
Perhaps just as daunting, the fairly reserved, matter-of-fact Mueller had to fill the shoes of a charismatic and much-beloved predecessor, Dick Notebaert.
After nearly three years, the result has been mixed. The love affair Notebaert created with the rank and file is, for the most part, over. Under Mueller, union ranks have been slashed by 25 percent, or more than 5,000 jobs, compared with a 10 percent cut in managerial positions.
Revenue has continued to fall. But Mueller surprised analysts by finding ways to make the company more efficient and reeling in a buyer in CenturyLink, which announced plans in April to acquire Qwest for $22 billion in stock and assumed debt.
If the merger is approved by shareholders and regulators, Mueller will be known, more than anything else, as the man who sold Qwest, a legacy he embraces.
"I'm real proud of the ability to make a better, bigger company," said Mueller, 63. "And better being important. Big just isn't good for itself."
When a head-hunting firm called in the summer of 2007, Mueller had been retired for about a year after abruptly resigning as chief executive of Williams-Sonoma.
the three-year stint at the cookware retailer, Mueller's
experience is rooted in the
Qwest board member Jim Unruh, who led the search for Notebaert's successor, said the board wanted someone with telecom and retail experience who could help grow the consumer business.
"Dick's biggest focus in the time he was there was to restore a level of financial health," Unruh said. "That continued to be a major priority for Ed, but (there was) also an increased priority being placed on 'Where is growth going to come from?' "
Mueller said the board did not ask him to seek a merger candidate. "If that was an option, it was my job to bring it forward," he said.
Tasked instead to devise a growth strategy, Mueller boasted early on about business ideas that left analysts and investors scratching their heads. He wanted to tap into the home-alarm business and launch a Geek Squad- type service.
Mueller ultimately scrapped those thoughts and invested in high-speed Internet and focused on partnerships with Verizon Wireless and DirecTV. Qwest now markets itself as a broadband company, not a phone company. It has spent hundreds of millions of dollars boosting Internet speeds.
While the broadband business has picked up, Mueller hasn't delivered on overall revenue growth because of land-line losses and the lack of a visionary strategy. But he has done well with existing assets, analysts say.
The company has wrung out more production from a dwindling workforce. For example, Qwest cut the allotted time for broadband installations, raising the number of jobs workers are expected to complete per day.
"Qwest found a way to operate their business in a more efficient way than AT&T and Verizon did," said Jonathan Chaplin, an analyst with Credit Suisse. "He deserves credit for that."
But the constant drive to do more with less is taking its toll on workers.
"It's been two years of always stressing out about whether I'm going to get fired," said a Qwest cable splicer in Seattle, who asked to not to be named. "It's a toxic work environment."
The Spirit of Service, a trademark of the Notebaert era, is a distant memory. High marks for customer service from J.D. Power & Associates have been replaced with "Hall of Shame" recognitions from MSN Money.
"I've never seen morale as low as it is," said former Qwest technician Tom Wheeler, 60, who retired late last year.
Communications Workers of America District 7, a union representing about half of Qwest's 30,000 workers, declined to comment.
"I don't think we really want to get involved in the story about Mueller," said union spokesman Al Kogler.
Workers say there's a disconnect with senior management. One joke that circulated within the company's headquarters is that Mueller's unfamiliar face among the rank and file makes him a good candidate for "Undercover Boss," the reality-TV show where top executives work incognito in an entry-level position.
"He has no concept of what's going on in the field," Wheeler said.
Mueller brushes off the notion he's an absentee leader. "I don't at all feel like it's a hands-off operation," he said.
He estimates that he splits his time evenly in the office and on the road, visiting with employees, customers and partners. Since 2009, Mueller has held eight town-hall meetings with employees across the company's 14-state local-phone service territory, according to a Qwest spokesman.
The problem may be that Mueller succeeded Notebaert.
"(Notebaert) answered all of my e-mails," said Melisa Harder, a former manager of customer experience who left Qwest last year. "He would stop by your desk. He knew everyone's name. Anybody replacing him would've had a hard time."
Harder said in the few times that she met with Mueller, he was deeply engaged. "Not everybody got to see that side of him," she said.
For his part, Mueller said he is focused on innovation. The company is close to testing a new service for residential customers.
"I've spent a good deal of time on it," said Mueller, who made $12.1 million in 2009. "It's likely that we'll have a controlled market trial in 2011."
He wouldn't disclose specifics, but said he expects CenturyLink to move forward with the idea even after the merger closes, expected by April.
Investors haven't exactly embraced Mueller. Qwest stock traded at more than $9 a share when he took over and dipped below $3 within a year. It has hovered around $5 in recent weeks.
But former board member Linda Alvarado lauds Mueller for Qwest's financial performance during tough economic times. She said she resigned in February to spend more time with her construction company.
"It had nothing to do with dissatisfaction or any merger," Alvarado said.
Though Mueller isn't often mentioned in local business circles, he said he is active in the community.
He sits on
the board of the
"My style is not to be about me and about a high-profile naming kind of thing," Mueller said.
golfer and reader, Mueller said he will take time off after the
merger closes. The combined company will be based in
looking to buy a home in
to take a little breather," he said. "I've been doing this 43
years. I never thought I'd come here to
Key events during the tenures of recent Qwest/U S West chief executives:
April 1998: Sells interest in wireless venture to partner AirTouch for $5.9 billion, now a part of Verizon Wireless
June 1998: Spins off cable-TV operation MediaOne, now a part of Comcast
JOE NACCHIO ("Classic" Qwest, 1997-2000; Qwest 2000-02)
June 2000: Qwest merges with U S West in a $48 billion deal.
July 2002: Resigns amid criminal and civil probes into the company's accounting practices.
December 2005: Indicted on 42 counts of criminal insider trading
April 2007: Convicted on 19 counts of insider trading
April 2009: Reports to prison for a six-year term
DICK NOTEBAERT (2002-07)
August 2002: Agrees to sell Dex directory business for $7 billion to help the company pay down a hefty debt load and avoid bankruptcy
October 2003: Wipes out $2.5 billion in revenue improperly booked from 2000 to 2002
October 2004: Agrees to pay $250 million to settle SEC fraud charges stemming from the Nacchio era without admitting or denying guilt
May 2005: Ends bid to acquire MCI, losing out to Verizon
ED MUELLER (2007 to present)
February 2008: Issues a dividend for the first time since June 2001
May 2008: Strikes deal to resell Verizon Wireless cellphone service, replacing Sprint
April 2010: Announces $22 billion merger with CenturyLink