Geoff Cutmore - Morning Thoughts

Is Verwaayen Going before He's Pushed?

Geoff Cutmore

"I have been at this company for more than 6 years - sometimes you know when it is the right time to leave". Ben Verwaayen wasn't giving too much away on squawk Tuesday morning, just an hour or so after announcing his departure from BT.

Was he pushed? Was he tired? Was he running out of ideas? Where was he going next? Was he the wrong man to steer the ship through an economic slowdown? The questions came like guided exocet missiles and just as expertly they were shot down before they hit their target.

So what about the facts. When Verwaayen joined the company in 2002, it was struggling for direction. It was still reeling from a decision to de-merge Cellnet in 2001 - which then became O2. BT disposed of one of the more interesting growth units in the business and gave all the impression of having lost sight of its role in life. Like a heavyweight boxer past his best, BT was carrying too much fat and got by resting on its fading talents (fixed line retail and wholesale) as younger fighters (Vodafone and Orange) stole business.

Verwaayen stopped the rot, cut jobs, engaged the regulator and took BT in the direction of digital and online services. People forget BT lost nearly 2 billion pounds in 2001. When the numbers come in for the final fiscal quarter of last year on May 15th, the company will likely hit revenues of 20 billion pounds.

But the share price has come off its recent highs and the last reported quarter saw sales miss estimates. Some analysts say more cost cutting needs to be done, and Verwaayen has not been aggressive enough.

The timing of the departure has also prompted thoughts that visibility of earnings growth from here is poor and the company is unlikely to outperform expectations.

All idle speculation of course, as Verwaayen was tight lipped in this closed period ahead of earnings. And he wasn't giving much away about his future. The Surrey home he has enjoyed with his family is up for sale - leading many to think he will be heading back to his native Netherlands when he is free of BT commitments at the end of June.

The market made its own judgment - nudging the share price higher on a lackluster day's trade. There is an expectation that Ian Livingstone, with an FD's background will wield a sharper knife on the costs side. Cometh the time, cometh the man! If Verwaayen wasn't pushed maybe he just decided he didn't have the stomach to fight the next slowdown. At 56 he is young enough for another job or two, in business or politics - no doubt when the time comes we will find out what the future holds for this accomplished telecom supremo.

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