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Deutsche Telekom AG Message Board

  • troy48084 troy48084 Jul 10, 2002 9:06 PM Flag

    Sommer's bowing out?

    It looks like he's getting ready to make an exit, but on his own terms. If he does, whoever takes his place better know what he's doing. I don't think some guy from VW or Krupp is going to know too much about the industry.

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    • When you pay for an inflated company's stock with your own inflated company stock, math tells me that it still doesn't make the deal attractive. You could argue that both VSTR and DT shareholders were equally stupid given the level of the stock prices. But in the case of VSTR, the level of inflation of their stock was higher than DTs, which made DT's stock fall faster than industry average and we all are suffering from that. IMHO, an intelligent and good long term acquisition is one when measured against your own cost of capital including your own relative leverage or debt level. Given the level of inflated stocks 2 years ago, no deal was attractive from that perspective, so Sommer should have walked away on VSTR and everything else. Why trust a manager that doesn't follow simple return on invest rules and follows the market he doesn't control, let alone understand.

      One2One was the UK cell operator bought for cash. I don't remember the price, but it was way up there as well.

    • Who can tell about the timing? You either buy or you don't....I don't remember
      VSTR offering a "little bit" of itself for sale. I don't remember licenses being sold
      in bits and pieces either. Where were these
      politicians when the FCC (or whoever) decided to charge for airwaves??? It would have
      been cheaper for EVERYONE to just talk on
      the phone with their windows open.....not to mention far fewer headaches!!

    • I do not want to argue too much on this topic, but Sommer obviously saw the declining market, as did I. That is why the deal was mostly a stock trade. Sommer traded mostly hugely over-valued stock for hugely over-valued stock. It makes the deal sound a lot more expensive than it was. This was his price to get into the American market. I knew back then that the price to get in would be high. He made the same bet on UMTS. He may eventually be right on this. I respectfully disagree. I know nothing about OneZone.

      The VSTR deal was the price of admission; UMTS is the price of admission to a market that I question; about OneZone I am ignorant. My complaint still comes back simply to lack of action on the obvious impending debt crush. The collapsing markets may have been a complete block to any action, but I don't feel that way. That was the Sommer excuse.

    • It's Voicestream, UMTS, and One2one that were his biggest mistakes. There is only a simple answer to your question. I don't think Sommer had a financial background ever - but he surely made the biggest mistakes financially, no wonder.

      Markets are going down really fast. So wake up: What you should be thinking is that Sommer should have foreseen that markets were way overvalued when he acquired internationally. Look at SBC and Verizon, solid management who knew back then that they would come out as winners eventually. That's what I call good management with a long term view.

    • Other than the price paid for UMTS, which I disagree with, though this too may prove to be the price of admission, what major acts did Sommer commit that were largely out of line. I can debate at length what would have been required to get into the US wireless market at the time (VSTR), and the comparative levels of stock, and all of the other variables at the time which made certain decisions inevitable, but I am not totally up to speed on other Sommer moves. My basic difficulty with him, other than UMTS, was indifference to action as the market tanked. The market direction was obvious, but Sommer sure seems to be more active as his future is in imminent peril. Beyond lack of action to relieve debt pressures, were there any specific actions that make him unsuitable?

    • The truth is that no intelligent person would want to take Sommer's job given the current state of DT's level of debt. Putting myself in Sommer's shoes though, it was a smart move to pile up debt, because what else would have saved his job other than making it irresponsible for anybody to step in and take his place? I just hope I am wrong...

      His latest comment that the company is in excellent shape for the future reminds me though, that he still hasn't understood. Banks may not want to refinance debt if his core business underperforms. I don't think DT will go bankrupt, but I see the stock loose further value if there is refinancing pressure on the debt. So it's time to part from some of those crazy acquisitions quickly to keep shareholder value alive. That is what only a new CEO seems to be able to do.

    • He won't go out without a fight and I, for one, hope he doesn't. It's easy to find fault and complain. I don't notice anyone coming up with a solution. At least Sommer has thorough knowledge of the telecom
      industry and that counts for a great deal in
      my humble opinion. Who needs someone from the
      automobile industry? Ron Sommer is in a big
      fraternity along with BT, AT&T, FT,NTT & so on. Does anyone remember when
      OMPT was 90 cents???

 
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