Another brief chat with Randall Stephenson

att-chairman-and-ceo-randall-stephenson-promoting-live-shareThis time he put the call through himself, on his own, and the first thing he said when I picked up was, “Buddy, are you out of your goddamn mind?” I was like, Dude, I’ve got a bionic liver and I’ve been using psychedelic drugs on a regular basis since the early 1970s. Of course I’m out of my goddamn mind. I’m crazy as a loon. He started shouting, but just then — I’m not kidding — the call got dropped, because, see, I was on my goddamn iPhone and the damn thing can’t hold on to a call in downtown Palo Alto.

I tried moving six inches to my left, and got a signal. Then I moved back, and I lost it. This took place in downtown Palo Alto at my yoga studio. I tried going outside, and got a signal again. Randall called, I picked up, got dropped. I walked down the block, and dialed him back. Finally got him. He’s like, “Just don’t fucking move, okay? Just stand right where you are and let me shout at you for a minute.” I was like, Fine, whatever, shout away, and I put the phone down on a bench and did some stretches. Finally I picked up and said, Randall, you’ve met me, right? Do you remember what I look like? Do I look like one of Tiger Woods’s mistresses? No? Well then why are you trying to bone me in the butt, Randall? You understand what I’m saying?

He says he has no idea what I’m talking about and I said, Dude, I’m talking about the fact that over the past eight quarters you’ve reduced your capital expenditure even while we’ve been sending you loads of new data subscribers. Last quarter you spent $4 billion on capex, which was $1.6 billion less than you were spending two years ago, at the end of 2007. Meanwhile your data revenues in the most recent quarter were $3.6 billion, up from $2.0 billion at the end of 2007. In other words, you took in $1.6 billion more on data plans, mostly thanks to iPhone, and then you boned us by slashing your capex. What the fuck, dude? Your total data ARPU is up 50% in the past two years, mostly (or all) thanks to me. And this is how you thank me?

He says, “Yeah, well, Steve, you’re looking at the wrong numbers. Look at our balance sheet. Look at our income statement. Look at those nice smooth net income numbers. The great Lou Gerstner himself could not have done better. Hell, Jack Welch must be rolling over in his grave.” I’m like, Dude, Jack Welch isn’t dead. He goes, “Whatever. You get the point. We’re managing our bottom line.” I said, You mean you’re screwing your customers in order to keep your investors happy? He goes, “Hello, it’s called running a publicly traded company, have you heard of it? Duh. There’s this thing called the stock price. It’s tied to your earnings. You divide net income by shares outstanding and you get this number called earnings per share. You multiply that number by some made-up number called a multiple and you get a stock price. If that number goes down, my investors start screaming for my head. I live and die by that number, Steve. I check it every fifteen minutes.”

I’m like, So this is why you don’t build out your network and make it suck less? He goes, “Welcome to reality, girlfriend. I answer to my investors, no one else. They’re the ones who own the company.” I said, But why can’t you explain to them that if you take care of your customers, even though it might cost more in the short term, in the long term it will be better for everyone, including the investors? He burst out laughing, and he’s like, “Oh dear God, did you just say long-term? Did you really use those words? What planet are you living on, buddy? Oh Jesus. Hold on. I just choked on a piece of sashimi. Okay. Okay. I’m back.

“Look, by the way, it’s not just the investors. It’s me and my team. How do you think we get paid, Steve? You think we just go to the board of directors and say, `Hello, I’m Steve Jobs, give me a Gulfstream V and a bunch of backdated stock options, and I’ll take one dollar as a salary’? Hell no. We get paid based on what the stock is doing, pal. That’s it, plain and simple. “We’ll do whatever we gotta do to make that number. Stop building radio towers? Hell, son, we’d start setting radio towers on fire if doing that would boost EPS. We’d conduct human sacrifices on the roof of our headquarter building in Dallas if it meant an extra penny per share. I mean, buddy, this radio tower business? It’s peanuts. Do you realize the kind of shit we’re capable of? Have you ever heard about the great pension plan conversion scam? All these big old giant companies were sitting around billions of dollars in their pension plans. They money’s just sitting around doing nothing. It’s just this big fucking pool of money that’s sitting there because you’ve got hundreds of thousands of retirees and the law says you gotta keep enough money to meet your huge pension obligation.

“But here’s the thing. You see that money, and you want it. Right? Who could resist? So what do you do? Simple. You change the pension plan to some kind of new phony-baloney plan and in doing so you reduce the obligation. I mean it’s like magic! Suddenly you’ve created a surplus in the pension fund. You apply that to earnings, and guess what happens? The stock goes up, and you get a big bonus. That’s right. Sure, the old folks howl, because their monthly pension payment went down and now they’ve got to pay through the nose for health care that was supposed to be free for life. But you know what? That arrangement was goddamn socialism. It was a cancer on our competitiveness. It was a boil that needed to be lanced. Now it’s tough because you’re not talking about screwing over nameless, faceless customers — you’re talking about fucking over the people who used to work with you. The people who hired you and trained you. The people who built your company and then were foolish enough to hand it over to you. And now they’re filing lawsuits, claiming that you took their retirement money and put it into your pockets. Which is, in fact, exactly what you did. But you know what? Boo fucking hoo, idiots.

“By the way, I’m not saying we did this to our retirees. Because we absolutely did not, and we totally adhere to the highest standards of corporate ethics. But are you feeling me on this, Steve Jobs? Are you? We are not a bunch of California hippies who want to sit around listening to Bob Dylan songs and talk about changing the world and giving everyone peace, love and free incense. Okay? We are not nice people, Steve Jobs. We’re the phone company. As for this network thing? The goddamn radio towers? Simple answer: Fuck you. We’ve got you and your stupid iPhone locked in, and we are going to milk it for all it’s worth. And if you keep up this bullshit about helping consumers, we will fucking hurt you. Is that clear?”

I told him it was, and then I went back down the block to the yoga studio. The class was half over, and frankly, my heart wasn’t in it anymore. So I just spent a few minutes looking at myself in the mirror and admiring how good I look in stretch pants, and then I came home and made myself a smoothie.

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