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Michael Capellas, Worldcom Chairman and CEO |
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Mastermind Keynote:
CEO is Upbeat About WorldCom’s Future
Thursday, 27 March 2003
According to Worldcom chairman and CEO Michael Capellas, his company's recovery plans are hitched to the rising star of Web services and work computing.
Speaking Wednesday in a Mastermind Keynote interview at Gartner Symposium/ITxpo 2003 in San Diego, Mr. Capellas said that his financially-challenged communications company has "a very clear vision of where we want to be in the marketplace."
Mr. Cappellas told Gartner analysts Tom Austin and Eric Paulak, that the vision is network-centric and relationship-oriented. Capellas also explained WorldCom's plans to rebound from what Mr. Austin calls being "branded with the scarlet letter B, for bankruptcy."
He also fielded questions put to him by Mr. Austin and Mr. Paulak regarding WorldCom's strategy for expanding into new markets and differentiating itself from its competitors in an industry that Mr. Capellas admits is facing hard times.
"Hitting bottom is a great way to begin coming up," he said. "We accept the social responsibility that we have to operate at a higher standard because of what happened in the past...We will have to earn our spurs."
To that end, WorldCom has instituted a zero-tolerance policy for ethical violations and is setting a benchmark on disclosure standards. Mr. Capellas also stated that employee morale at the company is high and that its customer retention rate is good. "It's pretty easy to get people to rally around the ideal of getting out of bankruptcy. It's clear that there's no time for mediocrity."
Mr. Austin contrasted the former Compaq CEO's successful role in helping to engineer the merger of Compaq and Hewlett-Packard with the challenges he faces in entering the troubled telecom industry and asked bluntly, "Why did you want to jump into a train wreck?"
Mr. Capellas replied that he was seeking a situation in which he could make a difference and that he felt that WorldCom was still "a very relevant company" from a technology perspective. He believes WorldCom will play an integral role in the development of network computing and the continuing evolution of Web services. "The next great wave of what's going to happen…is how do we actually get to a net-centric, utility model?" Mr. Capellas said.
This new, networked world will run on intelligent devices which all depend on an Internet protocol (IP) backbone. According to Mr. Capellas, that's where WorldCom comes in. Throughout the interview, Mr. Capellas reiterated that WorldCom's greatest asset is its network expertise and "its large IP backbone."
While the ideal of a utility has already been realized to some degree, Mr. Capellas said there was a lot of work yet to be done in bringing together networks, that the parts of the stack were not yet interchangeable. "The last mile is still a problem," he said, and that WorldCom will be working to develop partnerships for application integration and hardware as well as for wireless. Worldcom will concentrate on its core competency of network management. "The trick to this game is not to be something you can't be. The customers are really smart…they understand what you're good at."
Mr. Paulak countered that recent reports estimate that WorldCom's new revenue is down by as much as 30 percent. He suggested that WorldCom would have to expand its market reach, particularly in Europe, and worldwide, in the small-to-midsize business (SMB) sector.
Mr. Capellas says that WorldCom's ownership of its facilities and network will give it competitive differentiation in the European market. He concedes that the SMB market represents a challenge because "the difference between 's' (small) and 'm' (midsize) is pretty big." However, he believes small business and home usage have "blurred," and that Worldcom may be able to "float its consumer business up to encompass the small business market."
Part of WorldCom's recovery plans depends on how quickly the economy recovers. In the short term, Mr. Capellas agrees with Mr. Paulak's forecast that WorldCom's and other telecommunications company's rates will likely be rising in the future.
"Rate stabilization has to happen for the industry to survive. It's a natural evolution in the market to start to see the prices rising," he said. "All technology promises is that we'll give you more for less over time."
Sherry Fairchok
Gartner Staff
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