CEO's to watch in '08

HARRISON SMITH/TORONTO STAR FILE PHOTO
Telus president and CEO Darren Entwistle, seen at the groundbreaking ceremony for the Royal Conservatory of Music’s Telus Centre for Performance and Learning in 2005, needs to develop a new strategy to bring back lustre. Email story
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Dec 26, 2007 04:30 AM
David Olive
After a year of reckoning for global financial institutions, 2008 will be a time to repair balance sheets and recapture market share against a backdrop of continuing havoc in global credit markets. Star business columnist David Olive examines some of the players confronting the toughest business decisions in the months ahead.


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DARREN ENTWISTLE CEO, TELUS CORP.

Darren Entwistle was the telecom industry's golden boy in mid-decade, having presided over a 50 per cent gain in stock price between 2004 and 2006.

Today, however, Entwistle's once-hot Telus Corp. is beginning to look like just another telecom dinosaur, stuck with a venerable landline business in irreversible decline, and a plateauing in subscriber and revenue growth in its more lucrative wireless franchise.

It gets worse. A revitalized BCE, with Telus veteran George Cope at the helm, promises to curb the almost effortless gains Telus has long made at Bell Mobility's expense. And the upcoming federal auction of wireless airwaves means there will be viable upstart cellular rivals in most, if not all, of Telus's major markets by this time next year.

The stock market has reacted accordingly, knocking Telus shares down about 30 per cent. Which means that average annual gains for Telus shareholders since Entwistle became CEO in 2000 are a meagre 3.3 per cent – worse than any of Telus's rivals, including the sad-sack BCE and even government bonds.

That's a very different scenario than the hyper-ambitious Entwistle envisioned as recently as this spring – namely, a much-enlarged Telus that would be a national telecom champion on the world stage.

But Telus was outbid for BCE by the deep-pocketed Ontario Teachers' Pension Plan. BCE was to be Entwistle's stepping stone for a run at the large but troubled U.S. telecom Sprint Nextel Corp., in a series of manoeuvres that would have put Entwistle into the global big leagues astride a company with revenues in the $100 billion range.

What now?

Entwistle, 44, has to get his own house in order, lavishing capital on building fibre-optic cable directly to homes to compete with Shaw Communications Inc. in providing TV service. Entwistle also has to pony up for costly adoption of the GSM wireless standard – the dominant wireless technology outside North America – by which Rogers commands the market for global-roaming clients.

After shoring up Telus's base, Entwistle will be tempted to revert to Plan A, bulking up through acquisitions of the smallish Manitoba Telecom Services Inc. and perhaps Bell Aliant Regional Communications Income Fund.

U.S. takeover prospects include Leap Wireless International Inc., CenturyTel Inc. and Qwest Communications International Inc.

That's a more painstaking empire-building strategy than Entwistle had in mind, but he hasn't much choice. Telus will have to rapidly reclaim its star telecom status or risk a steady erosion in its franchise from existing and new rivals.



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JIM LEECH, CEO, ONTARIO TEACHERS' PENSION PLAN


As head of the Ontario Teachers' Pension Plan's private-equity arm, Jim Leech, 60, outmuscled rival bidders for BCE Inc. in pulling off a $35 billion takeover with two U.S. private-equity firms.

In spearheading the largest corporate acquisition in Canadian history, Leech secured his status as Claude Lamoureux's successor, becoming CEO of Teachers' on the latter's retirement late in 2007.

Even before the landmark BCE deal, Leech, a weekend mountain climber and graduate of the Royal Military College, had proved himself with a whirlwind of investments at home and abroad designed to yield bigger returns than the ultra-safe securities by which Teachers' meets its obligations to the thousands of teachers who have contributed to the now immense asset pool of $112 billion.

Leech's private-equity portfolio has generated an outstanding average annual return of 26 per cent since 1991. Among its highest profile successes is Teachers's 58 per cent stake in Maple Leaf Sports & Entertainment Ltd., owner of the storied Toronto Maple Leafs and the NBA's Toronto Raptors.

Despite the teams' paucity of championships in recent decades, and Toronto's diminutive size compared with New York, Chicago and Los Angeles, in a recent profile of Maple Leaf Sports, Forbes magazine reported that the Maple Leafs are "the most lucrative hockey team on the planet."

That might be the exact opposite of how long-suffering investors would describe BCE, whose stock hadn't budged for years until the firm put itself up for sale this year.

With his reputation now staked on Teachers's 52 per cent interest in BCE, Leech has moved quickly to revamp top management at Canada's largest telecom company, and vows that BCE will achieve the same high returns as the rest of Teachers's private-equity portfolio.

That will mean costly investments to upgrade Bell Mobility's technology to curb market-share losses to Rogers Communications Inc. and Telus Corp.


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PIERRE KARL PELADEAU CEO, QUEBECOR INC.

Pierre Karl Péladeau will have to decide soon on whether to abandon a vast part of his late father's legacy, a commercial-printing operation that under Pierre Karl himself was briefly the largest in the world, eclipsing in size the formidable nonprinting assets of Quebecor Inc. before it succumbed to price wars and lax management.

Péladeau's Quebecor World Inc. arm, 35 per cent owned by parent Quebecor Inc., overtook Chicago rival R.R. Donnelley & Sons Co. for the crown as the world's-biggest with Pierre Karl's audacious acquisition of Donnelley's U.S. archrival World Color Press.

But Quebecor World, with sales of more than $10 billion at its zenith, soon fell victim to the wide ambit of Pierre Karl's ambitions.

Quebecor overpaid for dominant Quebec cable operator Group Vidéotron Ltée. Péladeau aggressively expanded into English Canada with the purchase of the Sun Media tabloid-newspaper chain, embellished this year when Quebecor won a bidding war for the Osprey chain of small-town Ontario dailies against Torstar Corp., owner of the Toronto Star.

Quebecor thus yoked itself to the decline in fortunes of the North American newspaper business.

Too late, Péladeau, 45, also discovered that profit margins in the notoriously fragmented printing industry require ceaseless attention to cost control, and a seamless integration of acquisitions that is so far not apparent at World Color Press years after its purchase.

Now that Quebecor World has acknowledged its status as a firm whose "going concern" status is in question, Péladeau will be tempted to shed the albatross. And to refocus on the strengths of Quebecor's near-monopoly in Quebec francophone media.

Quebecor owns the province's largest cable operator and its biggest private-sector TV network.

It publishes many of Quebec's most popular books, music CDs and magazines.

All of which can be cross-marketed, of course.

Which suggests a lucrative makeover of Quebecor into the Rogers Communications Inc. of French Canada – which would mean shedding not only Quebecor World but the firm's thinly profitable major-market newspapers.


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TOM GLOCER CEO, REUTERS GROUP PLC

Tom Glocer was regarded as perhaps not up to the job of reviving a stagnant Reuters Group PLC when the U.S.-born tech junkie was promoted to CEO in 2001.

But Glocer, 47, pulled off an impressive turnaround, despite lacking the journalistic skills many thought necessary to the task. And now, after ushering his firm into the arms of Toronto-based Thomson Corp. in a $17 billion (U.S.) deal, Glocer heads a combined, renamed Thomson-Reuters Corp. slightly larger than its New York-based archrival, Bloomberg LP.

The creation of the new company, which will derive about 60 per cent of its $12 billion (U.S.) in revenues from sales of information to financial services firms, has coincided with the global credit crisis.

Glocer had warned analysts at a financial conference last month that the next two years could be rocky for his new company. “If we see continuing turmoil” in world financial markets, he said, the market for Thomson-Reuters services could suffer.

So far, that hasn’t happened, despite tens of thousands of job cuts on Wall Street. That’s because, at least for now, London and other financial capitals in Europe and Asia remain strong. And that reinforces the logic of the deal, which married Thomson’s strong North American presence with Reuters’s traditional leadership in European and Asian markets.

Tech geek Glocer, who wrote a software program to teach litigation techniques that’s now licensed to Lexis/Nexis and Thomson’s Westlaw service, will try to thwart an increasingly restive Bloomberg’s own growth ambitions. One tack is to merge Reuters’s specialized data for drug-company stock analysts with Thomson’s burgeoning database of medical developments.

But Glocer also proposes less obvious avenues for growth. These include a social-networking website modelled on MySpace and Facebook but aimed at financial professionals, a gathering place for the exchange of breaking-news analysis.




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TOM LASORDA, PRESIDENT, CHRYSLER LLC

In the ego-charged environment of Detroit's Big Three executive suites, Tom LaSorda is an anomaly. Pushed aside earlier this year as CEO of Chrysler LLC by new owner Cerberus Capital Management in favour of Bob Nardelli, recent head of Home Depot Inc. and a Fortune 500 CEO with star power, the comparatively low-profile LaSorda was expected to quit the premises.

And the new Chrysler team had reason to retire LaSorda, 53. He carries the can for overproduction during his two-year CEO tenure that, in a failed bid to retain market share, led to ruinous rebates to move inventory out of dealer showrooms, a tactic as old as Detroit.

Except that Tom LaSorda is the only "Chrysler guy" in the top ranks of Chrysler and Cerberus, otherwise populated by a former U.S. treasury secretary, a CEO of Home Depot ousted from that firm in January, a 37-year veteran of Toyota's U.S. operation, and the former marketing director for Toyota's luxury Lexus brand.

The LaSorda family has worked at Walter P. Chrysler's company for three generations, as electricians, janitors, line workers and union leaders.

In retaining the amiable LaSorda, Chrysler's new brain trust is betting on LaSorda's popularity with rank-and-file employees to smooth relations as the firm sheds tens of thousands of jobs from its payroll, and to make nice with dealers whose ranks are similarly in need of streamlining.

In choosing to remain in Chrysler's decision-making circle, LaSorda has opted for a front-row seat in what could be Chrysler's last chance as an independent automaker.

And to be part of a turnaround for the history books if it succeeds.

It's a comeback strategy pinned to rapid, non-bureaucratic decision-making; unsentimental cuts in jobs and slow-selling models; an all-out assault on Chrysler's chronic product-quality woes; and an effort to rebrand the company — as Lee Iacocca did in the 1980s — as an American icon.


http://www.thestar.com/Business/Columni ... cle/287621

   

cool

   

Péladeau's likely to go through a tough year though. Things are changing quickly in the Quebec medias these days and the unstability, coupled with poor employer/employee relations overall and the crash of the paper industry, could have some pretty dire effects on PKP and what he owns.