During the 1q2005 sold remaining 73 shs of CBB for abt 4.9/shs
sell operation 6,604.68
dividends rec'd 233.78
buy operation 4,463.13
total profit 2,375.33
This was a long term, 10 yrs, and profitable operation. I learned a lot by owning Cincinatti
Bell. CSN got carried away during the build out of the broadband networks during the 1990s.
CSN fired LaMachia its seasoned CEO, hired a guy w/ "broadband vision", changed the co
name to reflect its new vision, tremendously overpaid for a broadband network, and had
visions of competing with the RBOCS in the local and long distance communications
business. The new "Broadwing" would last all of 4 yrs; when the co would
get back to its model of providing communications srvc for Cincinatti
and its suburbs -- its original vision. The original CEO was skeptical of the broadband junk
but could not express his doubts coherently, so the new vision guys thought he was
outdated and old fashioned. The "vision" CEO Ellenberger had no sense of history, or
he could have drawn a parellel between the broadband expansion of the 1990s and the
railroad expansions of the 1800s when many RRs went bankrupt and only the consolidators
made $$$s when the smoke cleared. During this time, the profitable yellow pages subs
was sold to finance the vision. His replacement CEO Mooney was more of the same vision.
But Mooney could talk to the board of directors whereas Ellenberger was only a "vision"
guy. Mooney was forced to write off almost the entire costs of the broadband network
while the creditworthiness of the co went into the toilet. This was only appropos
because the stock price went into the toilet during Ellenberger's reign.
Getting back to the original CEO, he oversaw the spin off of the billing dept and called
it Convergys. I owned CVG for a few years and believe it’s a pretty good service
bureau, but CVG is a capital intensive co that must buy a lot of expensive communications
equipment to keep up with its competition.
My "learned" lesson was the importance of a effective and communicative CEO, the original
guy was good but could not express himself on the new technology issues and was steam
rolled away the the vision guys. Also, I knew about the disaster of the railways during
the 1800s, but I never wrote a letter to the company expressing my doubts on the enormous
purchase price of the broadband network that used the fiber optics technology.
I knew the shareholders were being led down the primrose path, but did not sell all my
shares right after the business model changed away from providing local communications
services, and div was eliminated -- my true failing.
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