CyberWorks Taps Lucent's Butcher For No. 2 Position Behind CEO Li
April 8, 2002
By JOANN S. LUBLIN and MATT POTTINGER
Staff Reporters of THE WALL STREET JOURNAL
Pacific Century CyberWorks Ltd., the biggest telephone company in Hong Kong, announced Monday that it selected a former Lucent Technologies Inc. executive as its second in command and strong potential successor for its chief executive, Richard Li.
Michael J. Butcher, 53 years old, was named chief operating officer and an executive director. Those posts are now held by William Cheung, who will leave the company after a transition period. Mr. Butcher, the head of Lucent's international operations until last December, will run day-to-day operations, act as Mr. Li's deputy and help him pursue his latest strategic initiative: transforming PCCW into a high-tech power and a success in China.
Alexander Arena, deputy chairman of PCCW's executive committee, declined to comment on Mr. Butcher's appointment.
The Asian company recently said it had taken a 45% stake in a $10 million systems-integration joint venture with mainland Chinese oil company Sinopec Corp. Mr. Butcher said Friday that he expects PCCW "will focus on China more significantly" by building on that joint venture deal. "It will be fun working with Richard," he added. Mr. Butcher will move back to Hong Kong from London and begins his new job Monday.
PCCW's selection of Mr. Butcher concludes an extensive international search launched early last year to find an experienced telecommunications executive who might possibly succeed Mr. Li, 35, in the No. 1 job. Mr. Li, also the company's chairman, is the well-known son of Hong Kong's richest businessman, Li Ka-shing, and is a billionaire in his own right with 37% ownership of PCCW.
During a news conference late last month, Mr. Li said "there is currently no plan to have the CEO position offered -- not in the short term." But privately, one informed person said, the PCCW leader has assured Mr. Butcher that he eventually will gain the top title, without offering a specific timetable. Because Mr. Li's father wields so much influence in both Hong Kong and China, immediately naming Mr. Butcher chief executive "probably is too much," this person explained.
Mr. Li has also been reluctant to step aside while he is the subject of so much investor ire, his associates say. Since winning its bid to purchase Hong Kong's main phone company from Cable & Wireless PLC of the United Kingdom two years ago, the stock price of PCCW has fallen 93%, caught in the downdraft of poor investor sentiment for the technology and telecommunications sectors. Many investors blamed the extent of the fall on Mr. Li, saying he placed emphasis on unprofitable Internet investments instead of the company's core telephone business.
At last month's news conference, PCCW disclosed it had posted profit of $243 million for 2001, swinging from a loss of $16.58 billion a year earlier when it wrote down goodwill from its acquisition of Hongkong Telecom. PCCW attributed the better-than-expected performance to its back-to-basics approach, which has included a major debt-refinancing initiative, a 9% reduction in operating costs and aggressive sales of its residential broadband Internet service.
Thanks to an improved balance sheet, reduced costs and healthy operational returns, the company "is poised for going forward and growing" in Asia, Mr. Butcher said. Its strong cash position means "we will be pretty aggressive about building the company from an acquisition point of view," including takeovers outside Asia, he continued.
He disclosed that he already is scrutinizing several potential acquisition targets for PCCW.
Mr. Butcher, who was born in Britain but also holds Australian citizenship, joined Lucent in 1997 as its Hong Kong-based head of its Asian-Pacific region. He said that responsibility covered China along with several other countries. In May 2000, he took command of all international operations for the Murray Hill, N.J., maker of telecomunications equipment. During the year ended Sept. 30, about 35% of Lucent sales came from outside the U.S.
Lucent colleagues regarded Mr. Butcher as "a tough-minded guy" who often "questioned the way things always had been done" and didn't fear tackling difficult decisions, one acquaintance recalled. Indeed, another acquaintance noted, Mr. Butcher helped craft a major reorganization last June that effectively eliminated his position. With that reorganization, Lucent condensed its five major businesses into two main operating units. The manufacturer's new structure made it unnecessary to fill his job once he left.
Mr. Butcher said he quit Lucent because "I felt there were greater challenges for me elsewhere." Indeed, he disclosed that he turned down several offers to become CEO of a non-Asian company or a senior-level executive of an American one -- partly because he prefers working in Asia. The PCCW offer "was one of the best structural opportunities I could find" there, he said.
Mr. Butcher and Mr. Li met for the first time last January in Hong Kong, according to the new chief operating officer. The pair hit it off immediately because "they are very complementary. That is obviously why he was chosen," said Donna Roche-Tarry, a senior telecommunications partner at recruiters Heidrick & Struggles International Inc. who handled the search. She also heads the firm's Greenwich, Conn., office.
Write to Joann S. Lublin at joann.lublin@wsj.com1 and Matt Pottinger at matt.pottinger@wsj.com2
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Updated April 8, 2002 7:02 a.m. EDT
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