Bob Annunziata runs one of the biggest, not to mention most ambitious, telecommunications companies in the world, whose goal is to lay the fiber-optic cable to connect the whole planet
This month marks the one-year anniversary of Bob Annunziata joining Global Crossing Ltd. as chief executive. Within the past year, the company has had a 2-for-1 stock split, acquired telecommunications company Frontier, bombed out on an attempt to acquire US West, and increased its workforce from 140 to 13,000 worldwide.
Although Annunziata didn’t foresee all these events happening in such a short time when he signed on, he did get good feeling about the company when founder and Co-Chairman Gary Winnick and Co-Chairman Lodwrick Cook approached him about the position.
“It took about six seconds for me to realize what a great opportunity it would be,” he said.
Before joining Global Crossing, Annunziata served as president of AT & T;’s business services group and was for 15 years the chairman and CEO of Teleport Communications Group.
Sitting in Global Crossing’s Beverly Hills offices (located in what were the original offices of MCA Inc. where Shirley Temple signed her first contract), Annunziata summed up the company’s goal in one phrase: “We want to change the world.”
Question: Your fourth-quarter results are officially being released on Feb. 18. What should we expect?
Answer: I think you can expect that we have met or exceeded analysts’ expectations. This will be the first quarter that all the different companies Global Crossing, Frontier, Racal have come together. I’m excited that the business has come together and that the culture is coming together and we’re increasing the challenges we can meet.
Q: Your stock went through a pretty severe downturn there, although now it has recovered. What has been the fallout from that?
A: We think two things happened. There was the USWest activity in the summer, and the entire telecommunications sector had been repricing. After we closed Frontier and the announcement of (our advances) in Asia, things started turning around. It demonstrated that the management team was not going to let stock price stall its efforts to grow the greatest network in the world. We did not let that distract us.
Q: Can you talk about some of the progress you’ve made in wiring up some of these far-flung countries?
A: In the Caribbean, you’ll see that we have a cable that’s going to St. Croix and Miami. The more important aspect of our network, though, is coming in December, when we finish the Pan-European network. We have 13 cities that are up and connected now, we’ll have 24 more by June. This past December, we had another major milestone we finished the fiber-optic link from Seattle to Japan. So now we have connectivity in the world that goes from the major hubs in Europe, through the United States, to Tokyo, Osaka and Nagoya. We now have a global network that I believe no one else has, because we own these cables. We are in a very unique position.
Q: How important is the Pacific Rim to your long-range plans?
A: I think when you look at where we’re going with all our networks here, it’s important to know that in 2005 we’re looking at a trillion-dollar marketplace. One-third of that market will come out of the United States, one-third will come out of Europe. We own 100 percent of the network in the U.S., and 100 percent of the network in Europe. By 2005, Asia will be about 30 percent of the trillion-dollar market. When you look at our aggressive plans of linking not just to Asia but in Asia, Hong Kong, Singapore, the Philippines and Korea, we will be the best-positioned single company to own all those facilities worldwide.
Q: Wiring up China outside of Hong Kong would seem to be the crown jewel of your efforts. Do you think that’s likely to happen, given the government restrictions there?
A: Hong Kong is the gateway to China and we believe that because of that relationship, we’re the best-positioned company to capitalize when the government lifts those restrictions which they will. I think many companies are analyzing when that will happen, and that’s why we will have our cables in, between this year and next year, in that part of the world, so if it happens next year or the year after we are there.
Q: What is the division of labor between the L.A. and Bermuda offices?
A: We have an office in Bermuda that does a lot of our accounting services, and some customer care for all the regions. (The Bermuda office) is part of our business and it’s where we got started.
Q: In retrospect, do you think Global Crossing is better off without USWest?
A: Well, at the time, when we saw the value of USWest, we thought it would be a very valuable, lucrative deal for us. As the complications started happening and the price for that entity was rising, we decided it wasn’t the right value for our shareholders. So we do think, today, based on that, that we are better off.
Q: Are there any more acquisitions on the horizon?
A: Would you like me to tell you the company that we’re going to go out and buy next week? (Laughs.) No, I can’t tell you that. We do have a plan to grow organically, though. If we see a company that would fit our plan, then clearly we will try to do an acquisition if it’s of the right value.
Q: Are you doing any sort of angel investing for technology startups?
A: Me, personally? No. I’m too busy. I don’t have the time to do the thorough due diligence you would need on these kind of companies, as well as watch it and track it. (Global Crossing) does invest in different companies to help them get new products and services and bring more clients on board. You will see us taking different investment positions, sometimes to access the client base, sometimes for a good value.
Q: The Ortel acquisition by Lucent illustrates the trend toward consolidation in the telecommunications industry. Would you ever sell out to a bigger player?
A: We are building a company to last. We are here and we have a great infrastructure. But we do have a fiduciary responsibility to our shareholders. I mean, if there was the right opportunity for our customers, for our shareholders and our employees, we would have to take a look at it.
Q: What’s your take on the competition, like Qwest and Level 3 Communications?
A: It’s a trillion-dollar marketplace and I think we have a different game plan because we own all the cable systems on a worldwide basis and on a terrestrial basis. We have a different value to offer. You look at our network, and it’s probably the best network in the world today.
Q: How much traveling do you do to these sites? What’s a typical day like for you?
A: Last week I was in five cities in one week. Last Tuesday, I probably left Morristown (N.J.) airport at 6:30 a.m., got to Rochester (N.Y.), had eight meetings with senior executives, flew back here at 6 that night, went to dinner with a client. Then it was wheels up at 6:30 the next morning, on my way to Minneapolis for a meeting I held with employees to talk about plans for increased market penetration. Left there around noon, went to Cedar Rapids, Iowa, where we have our calling-card operators, met with the management there. Finished that, flew to L.A. and then had dinner here with some of management. I play the time zones.
