24/7 Wall St. has evaluated over 200 CEOs in order to select it CEO of the Year. Six finalists were chosen from the list. The measurements were based on company stock performance for the last two years, innovation, financial results, and the quality of the competition that each company faces in its markets. We also took into consideration whether the corporation was operating in an industry with special challenges.
Wall St. does not have to go back more than a couple of years to the time when many investors thought Verizon (VZ) CEO Ivan Seidenberg had more guts than sense. He made a public commitment to spend $23 billion building a fiber-to-the-home product called FiOS. By 2010 it would pass 18 million homes with a product which would bring consumers TV, broadband, and voice. Skeptics viewed it as a waste of money and a bad bet. Cable companies had the "triple play" market sewed up. Fighting uphill against entrenched competition was almost certainly a losing play.
Verizon’s shares spent a lot of time in Siberia. Looking at the company’s five year share performance, from mid-2003 to mid-2006 even Sprint’s (S) stock outperformed VZ. But, so far this year, Verizon shares are up about 25%, while Sprint (S) is off 18% and AT&T (T) is up only 8%.
Its market performance is justified by its first three quarters. Revenue moved from $65.6 billion last year to $69.6 billion in the January to September period. Operating income went from $9.9 billion to $12.2 billion. In the company’s wireless business, revenue moved from $27.9 billion in the first nine months of 2006 to $33.4 billion in the same period this year. Operating income went from $7.1 billion to $8.8 billion. At the end September Verizon Wireless had 63.7 customers.
The belief that FiOS would not work has turned out to be wrong. Verizon ended the third quarter with 717,000 subscribers and most analysts see strong uptake for the product in areas where it is available. The progress of FiOS has sent cable shareholders running for cover as their managements talk about slowing subscriber growth and the competition from telecom companies.
Seidenberg has been in the telecom business since he got out of high school. He was around when the original AT&T was broken up in 1984 and has been there in management and as CEO of Bell Atlantic and NYNEX as most of the "Baby Bells" have merged back together. He was part of the industry before DSL, wireless, or fiber. And, he has had made a bet on a technology which is likely to be the key to moving his industry forward.
Douglas A. McIntyre was the editor-in-chief and publisher of Financial World which started the CEO of the Year Award in 1981. He has also been the president of Switchboard.com.