Early Warning

Pacific Bell CEO says dotcom meltdown signaled a slowdown in business

Not many can find positive things to say signaled last year’s dotcom meltdown. But Ray Wilkins is one of them.

The president and CEO of SBC Pacific Bell and SBC Nevada Bell says the dotcom meltdown alerted management to the need to realign operations in anticipation of lower revenues months before the economy slumped into recession. “We began managing our force early in [2001], and managing our expenses, so that [they] were in direct correlation to the revenues we were bringing in,” Wilkins says. One of the expenses that was closely watched was hiring practices. “The tendency is, [when you] lose a person, you replace them, but our leadership team made a very conscious effort to look at those situations and replace only where we needed to,” he says.

The 27-year veteran of SBC Communications Inc. (the parent of Pacific and Nevada Bell) confesses that the California economy is exceptionally challenging. “The economy has been particularly difficult here in California because you went from a very robust economy that was to grow probably in the 3% to 4% range in 2001, to one that is probably less than a half of a percent if not going into recession,” he says.

The 50-year-old Wilkins (see “The Top 50 Blacks in Corporate America,” February 2000) says there were some workforce adjustments conducted on a voluntary basis, mostly through early retirement packages totaling at least 2,000 of the nearly 55,000 people for which he is responsible.

The executive says that managing proactively, before economic downturns, reduces the amount of layoffs when times are tough. This means closely monitoring all operations, finding areas that require streamlining, and increasing efficiency. “I think that’s the difference between people who see the signs, recognize the signs, and take action vs. those who discount those signs, ignore them, or don’t want to believe them, and then they get caught in a situation where they have to do something drastic and dramatic,” he says. “And that hurts people.”

Wilkins is optimistic about the outlook for his businesses. Sales figures and projections were unavailable since SBC Communications (with $53.13 billion in 2000 revenues) has a consolidated balance sheet and doesn’t provide breakdowns for its subsidiaries. “I think we have the right strategy, the right people, and the right balance sheet to be extremely successful,” he says.

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