The Association of U S West Retirees



Nacchio guilty ... of trying to best AT&T
By Stephanie Mehta
Friday, April 20, 2007

Former Qwest CEO Joe Nacchio was convicted of insider trading yesterday by a U.S. jury in Denver. 

Even before he became a convicted felon, Nacchio had a fascinating life story. 

He is a son of a longshoreman who rose up the ranks of AT&T, annoying many on the way.  He was determined to bold and break with AT&T's conventional and sometimes staid culture.  He apparently was the guy who came up with the brilliant idea during the long-distance wars with MCI and Sprint to pay customers $100 to come back to AT&T. 

When he was passed over for the presidency at AT&T, and a corporate shuffle was in the offing, Nacchio jumped ship for a lucrative offer to run Qwest, then a little known upstart seeking to compete with AT&T.  Almost as soon as he left Ma Bell, he began putting down his old company openly and vociferously -- well beyond the spirited jabs CEOs normally take at competitors. 

In one particularly harsh incident, the company sought to air an advertisement in which an executive named "Bob" is on a ledge, set to plunge to his death.  When the crowd finds out he works for a "bid long distance company," they urge him to jump.  Industry wags widely believed "Bob" was meant to be Bob Allen, AT&T's longtime CEO.  Once word of the insensitive ad got out, it was pulled.

Besting AT&T seemed to drive Nacchio.  It drove him to turn Qwest. a small long-distance operator, into a full-scale communications company by acquiring U.S. West, the Denver-based Baby Bell.  (Using Qwest's rich stock to buy a company with real cash flows and assets.)  It was almost as though he was trying to prove himself to the snooty executives back East who passed him over.

Did an unhealthy AT&T obsession drive Nacchio to do unnatural things in the business? 

Yesterday's verdict wasn't about that:  Nacchio was found guilty of personal enrichment at shareholders' expense.  But the testimony painted a picture of a man clearly obsessed with winning -- perhaps at any cost.