Minding Verizon's Bottom Line
Doreen Toben wakes up most weekdays at 3:15 a.m. By 3:30, she's multitasking -- working out on the Stairmaster while reading the latest news and analyst reports. She catches the 5:30 a.m. train from Princeton, N.J., and, an hour later, is at her desk in Verizon's New York City headquarters. If she's out the door by 7 p.m., she considers herself lucky indeed.
Toben isn't looking for sympathy. To her, that level of commitment is simply what it takes to be a member of the telecom power elite. And as chief financial officer of Verizon (VZ ), the largest U.S. phone company, Toben has earned her stripes. Verizon has 227,000 employees and annual sales of $67 billion. In 2003, it will spend between $12.5 billion and $13.5 billion to maintain its network and develop new services -- a far cry from the $18 billion it spent three years ago, but still a significant chunk of change.
Where Verizon decides to place its bets will affect not only customers but its competitors in the $300 billion U.S. telecommunications industry. And whatever the company decides, Toben's input will be critical. "In the telecom industry, you can't think of a CFO as a green eyeshade," she says. "I have a seat at the table in all strategy decisions. In fact, the financial piece is one of the most important components of strategy."
Right now, one of Verizon's primary strategies is to reduce its mountainous debt, which stood at $53 billion as of the end of the first quarter. "My job is to make sure the culture is much more focused on the balance sheet," Toben says. "We have to be much more disciplined than we ever were." Since Toben took over her role in April, 2002, Verizon has shed $12 billion in borrowings -- more, analysts say, than they've seen any other company take off in just 12 months.
There's still a long way to go. Competition is forcing Verizon and its sister Bells -- SBC Communications (SBC ) and BellSouth (BLS ) -- to lower prices on basic services such as local phone calls, just as the time customers spend on the phone is declining thanks to incursions by e-mail and wireless phones. Meanwhile, the Bells trail cable companies in the race to deliver high-speed Internet service, and lag behind long-distance carriers AT&T (T ) and MCI in the business service market (see BW Online, 5/1/02, "How Connected Are the Baby Bells"). More than ever, the decisions Verizon makes about where to invest and when will be critical to its future.
That's where Toben comes in. Over the past two decades, she has worked in strategic planning -- a division that now reports to her -- plus marketing, operations, and mergers and acquisitions both on the wireline (read: regulated) side of the business and in non-regulated divisions such as wireless and technology.
ALL WORK AND NO PLAY.
"The best advice I ever got was to move around and do different jobs," Toben says. "I now understand the economics of the business so well that if we do an acquisition -- vertical or horizontal -- I know whether it makes sense from a cost and revenue perspective."
During her tenure, Verizon has made no acquisitions -- a point of pride with Toben, since reducing debt is goal one. "Doreen knows the numbers better than anyone in the telecom industry," says CIBC telecom analyst Tim Horan.
She has paid a price to get where she is. When her children were young, Toben and husband Edmund, who serves as chief information officer of Colgate-Palmolive (CL ), often missed out on school and family activities. "Today, it's perfectly acceptable to say [my child] has a Halloween parade...and I'm leaving early. But in the old days, you were blackballed for doing it," she recalls, adding: "I was out in the field with guys with hair on their knuckles who were talking about digging ditches... [making time for family] was held against you."
She's also had to pass up a social life, she laughs: "Lots of people talk about having cocktails with the Bradys. My whole life is work. If I'm not at work, I'm with my kids...[success] doesn't come easily."
Nor will Toben's task of helping to ensure that Verizon emerges fortified after telecom's nuclear winter. The company faces multiple battles, one of which is to make its broadband offering more attractive to consumers. On May 13, the outfit announced that it's increasing its average Internet connection speeds, lowering prices, and -- if you live in the Big Apple -- making free Wi-Fi available from phone booths around the city (see BW Online, 5/14/03, "Verizon's Equalizer vs. The Cable Guys").
Verizon's goal is to grab 3 million DSL subscribers, up from 1.8 million now, and at long last make high-speed Internet access a profitable service. Another top priority is to lure lucrative business customers in a hyper-competitive field dominated by long-distance giants AT&T, MCI, and Sprint (FON ). And then there's the debt. Toben hopes that by yearend she will have knocked another $4 billion off the total.
To win, Verizon must succeed on all three fronts. So one thing is certain: Toben has more long days ahead.
By Jane Black in New York