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Why Did BT Bring In Bross?Why Did BT Bring In Bross?

BT's decision to hire former Williams exec Matt Bross as its new CTO has some observers scratching their heads

December 19, 2002

3 Min Read
Why Did BT Bring In Bross?

When the going gets tough, the roughed-up multi-millionaires slink off to London. That, at least, is what Matt Bross, the former CTO of Williams Communications, did last month, as he quietly accepted another CTO position at British Telecommunications plc (BT) (NYSE: BTY; London: BTA)(see Headcount: Mississippi Spurning).

Williams, or WilTelCommunications Group Inc. (Nasdaq: WTEL), as it’s now called, did not announce Bross's departure, and the company would not comment on why he'd left.

Bross was infamous in the days of the bubble for making millions -- possibly more than $42 million -- out of pre-IPO shares in companies from which Williams was buying equipment, according to Securities and Exchange Commission (SEC) filings (see Bross Rides the ONI Gravy Train and Williams' CTO Profits From His Position ).

In a post-bubble, post-bankruptcy world, executives taking advantage of their positions to get filthy rich is probably no longer something WilTel -- with its new name, new management, and attempted squeaky-clean image -- wants to be associated with (see Williams Bolts Out of Bankruptcy ).

"I’m sure that Williams is happy to have that little problem off their hands... [and] I’m sure he’s glad to be out of that whole Williams situation," says Peter Cohan of Peter S. Cohan & Associates, a management consultancy. "Maybe that was part of the plan: to get him out of there before they took it public.”

WilTel started trading on the Nasdaq two weeks ago. By 2:00 p.m. today, the company’s stock was trading at $12.80 a share.

Regarding BT, Cohan speculates: "Maybe they don’t care about the scandal over there... I think that a company in the U.S. would have a harder time hiring him."

Over the past week, neither Bross nor BT has responded to numerous requests for comments on his appointment. In the BT statement last month, however, the company said: "During [Bross’s] time at Williams Communications, the company completed a state-of-the-art, nationwide network build-out in the U.S., based on the best emerging technologies in the market."

Whether or not he actually did purchase the "best emerging technologies in the market" for Williams' network is, of course, a matter for debate. "Matt Bross just got away with self-dealing," says Robert Aceti, one of many former Williams shareholders who have tried to prove that the carrier’s Chapter 11 filing in April constitutes bankruptcy fraud (see Williams Settles With SBC). "He’s a boring person who just happens to have a lot of money now."

Farooq Hussain, an analyst with consultancy Network Conceptions LLC, says it certainly won’t be difficult for Bross to continue cashing in on his position at BT, should he choose to do so. "It’s still an old-boys club there," he says. "The opportunity to manage those relationships is much more insular than one might hope... I have no idea what [Bross’s] motivations might be, but procurement at BT is quite attractive."

Not everyone is so hard on Bross and BT, however. Frank Dzubeck, president of Communications Network Architects (no Website), insists that Williams’ former CTO was on the level, purchasing equipment that truly benefited the company. "All that garbage about his bias just didn’t happen," he says. "These guys are getting criticized for buying things... from startups at a great price. Did the equipment work? Yes."

As for why BT would want to hire Bross, Dzubeck, who has served on numerous advisory boards with him, says it’s simple. "BT has goals that are strategic," he explains. "It’s laying the groundwork for a much more globalized BT, with a U.S. presence. Matt is a great strategic thinker. Matt’s a builder. He’s a growth-oriented guy."

Maybe that clears up another puzzle: Why does Bross need to work at all, if he made $42 million during the bubble era?

— Eugénie Larson, Reporter, Light Reading

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