Subject: [NEXTEL-1] Telecom leaders subdued, hopeful

From: Marcel <[email-masked]>
Date: Wed, 13 Nov 2002 00:30:05 -0500

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Telecom leaders subdued, hopeful

Tuesday, November 12,
2002

BY JEFF MAY and TOM JOHNSON

Star-Ledger Staff

NEW YORK -- There were no grand visions from AT&T's Mike Armstrong this year. No brimstone and bravado from Joe Nacchio, the deposed CEO of Qwest. And no folksy formulations from Bernie Ebbers, the scandal-tarred ex-chief of WorldCom.

The podium yesterday at UBS Warburg's annual global telecom conference, one of the industry's biggest investor forums, was home to a far more sober and colorless lot than in years past. Gone were the magnetic leaders who talked about rewiring the world. In their place was a roster of cautious executives with nearly identical mantras: conserve strength, renew focus, cut costs.

The titans of telecom used to sound like a pack of boastful surfers, each out to prove they could best ride the unprecedented wave lifting the industry at the end of the 1990s. Now they get points if they can just keep their companies afloat.

"Somebody asked me how am I doing," joked Jim Brewington, president of Lucent Technologies' wireless equipment division. "Read Audie Murphy's book, 'To Hell And Back,' and that will give you some idea."

Surprisingly, attendance at the event was up roughly 20 percent from the 1,500 people who came a year ago, conference organizers said. And there were glimmers of optimism from some wireless carriers, as well as AT&T, which has benefited from WorldCom's bankruptcy.

"People are thinking the worst is behind us," said Nikos Theodosopoulos, who tracks the telecom equipment industry for UBS Warburg.

Yet even the good news comes with an asterisk. Theodosopoulos is projecting equipment sales will decline again next year, but not as much as they did this year.

"Things are getting better," he said. "But we're still saying there will be a decline."

One unresolved issue is what will happen if troubled carriers such as WorldCom and Global Crossing emerge from bankruptcy protection with their huge debts wiped away.

Asked whether that might lead to a new round of pricing wars, the chief executive of Telus Corp., Canada's second-largest phone carrier, exploded: "For God's sake, let's not play out the same old strategy. Let's hope all the losses and all the destroyed shareholder value at least has given us some (incentive) to have a different vision."

Few executives were willing to predict when a recovery will come. The one thing they could agree on was the need to control expenses.

David Dorman, who will succeed Armstrong as chief executive of AT&T Corp. this month, said the company's network division had 47,000 people in 1998 but now has less than 27,000. The company instead relies on software than can manage network traffic better to prevent outages.

Companies also are becoming pickier about their customers. Nextel Communications, the wireless company, said it runs two credit checks on people who show up at their retail stores -- and ends up turning down almost two of every three would-be subscribers.

Cost savings also extend to investments in buildings and equipment. Avaya Inc., the Basking Ridge-based Lucent spinoff, said it plans to slash its capital spending from $500 million a year ago to $75 million next year.

"Forecasting the future has become more and more difficult," said Garry McGuire, Avaya's chief financial officer. "We manage what we can manage, which is to cut costs."

Jeff May can be reached at [email-masked] or (973) 392-4282. Tom Johnson can be reached at [email-masked] or (973) 392-5972.

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