Even in a buyers market for telecom assets, it seems unlikely that Level 3 will engage in a shopping spree. More than 50 percent of acquisitions destroy value for the acquiring companys shareholders, Crowe says, emphasizing the importance of finding assets that can be integrated quickly into Level 3s operations. Peoples egos get wrapped up with reading their names in The Wall Street Journal as successfully acquiring another company. But winning is creating value three, four, or five years after the acquisition closes.
The CEO as Idealist
That kind of long-term outlook, which can be rare in some quarters of the high-tech world, is an ingrained part of Crowes vision. Even during the telecom boom, Crowe never saw Level 3 as a get-rich-quick scheme, but as a company building the business infrastructure of the future.
Crowe began by taking a fresh approach to his own method of compensation. After starting Level 3, Crowe tied his compensation package to the performance of Level 3s share price in relation to the S&P 500 index of stocks. Instead of quietly profiting by unloading huge amounts of stock, as many other executives did, Crowe instituted a system of publicly announcing when he was selling his own shares. On the occasions when Crowe divests himself of Level 3 stock, he does so gradually, over a period of months, so investors know when the companys CEO is selling and realize he is not trying to take advantage of the market. And on the accounting front, Crowe has even suggested that stock options be tabulated as a business expense a heretical view in the eyes of many technology-sector executives.
When you are a senior executive of a publicly held company, you are taking other peoples money in trust, and have a fiduciary duty to those other people shareholders, creditors to treat the money as if it were your own, says Crowe.
With Level 3s cost-efficient network now in place, Crowe is waiting for the economic upturn that will lead to long-term profitability. Today its the consumer that is supporting much of the economy, notes Crowe. New investment by business is pretty anemic. For Level 3, that means wholesale business coming from the ISPs, but fewer orders from other companies needing premium connectivity.
Much of Crowes drive seems fueled by a stubbornly idealistic streak about the technology his company is selling. Broadband, he insists, is not just a luxury, but the essential communications tool of the future, a way of transmitting visual datathrough teleconferencing, video-on-demand, or the futuristic face-to-face virtual contact Crowe calls telepresenceas easily as we transmit audio data right now. And while Level 3 may currently have a top-of-the-line system, he thinks the industry is just getting started.
We spent 100 years building a network that was largely about extending your ears around the world, at a price most people would consider affordable, says Crowe. Thats the phone network. Were in the early stages of building a network that is about extending your eyes. Broadband is the Model T stage development of a network that can support our eyes as well as our ears.
Crowe believes his challenge is to temper his own idealism with the pragmatism needed to outlast his competitors and secure Level 3s future, quarter by quarter. We tell ourselves at least once an hour we dont want to be right in the long term and broke in the short term, says Crowe. If his ability to weather the telecom storm so far is anything to go by, Level 3 should be around when the technological future arrives.
|Rensselaer Magazine: Winter 2003|
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