Fast Talk: One Shrewd Move

William T. Esrey

Chairman and CEO, Sprint
Overland Park, Kansas
After Enron, but before WorldCom and Adelphia, the financial markets started putting pressure on the commercial paper of even the biggest companies in the country. [Commercial paper is unsecured debt issued by companies to finance their short-term-credit needs.] Sprint had $3.5 billion of commercial paper outstanding, and in February, we decided to pursue long-term financing on about $2 billion of that amount. When we went to the market, we had the opportunity to do not just $2 billion, but $5 billion. We took that opportunity and got out of the commercial-paper market altogether.

Thank goodness we did. The financial markets continued to erode, and the cost of financing in the telecom industry shot up -- for companies who could get financing in the first place. Had we waited just a little bit longer, it would have been much more expensive. There's a question of whether we could have done it at all.

Investors just don't want to touch this industry right now. That will change, and the financial markets will see that communications is fundamental to the economy, with solid companies, solid products, and good customers. In the meantime, we don't have to go back to the financing table for years. That move -- whether it was lucky or smart -- was one of the best that we made this year.

William T. Esrey became CEO of Sprint in 1985. He spearheaded the company's entry into the long-distance telephone market in 1984, as well as its construction of the nation's first all-digital fiber-optic network and the first nationwide wireless personal-communications network (PCS) in 1994. Sprint launched PCS Vision in August 2002, making it the first U.S. wireless carrier to launch a nationwide 3G network.

Scott McNealy

Chairman, President, and CEO
Sun Microsystems
Santa Clara, California
Our shrewdest move was not overreacting to the bubble or to the bust. We monetized the bubble. We put a lot of money in the bank. We didn't make huge acquisitions in markets that we knew nothing about. We didn't extend ourselves by borrowing money that we didn't need. Instead, we put away billions of dollars for a rainy day. Now it's raining -- and for longer than a day.

Because we were smart then, we don't have to make dumb moves today. During the past nine months, we've gained more share from IBM and HP than in any other nine months in the company's history. Also, we've been able to protect our R&D investment. We didn't have to slash and burn like other companies, and we're still spending roughly $2 billion on R&D annually.

Maintaining that commitment to innovation is critical: 80% to 85% of the stuff in our pipeline is less than a year old. It's vital for us to keep rethinking, reenergizing, even cannibalizing our product line. Cutting off that development would be like Budweiser running out of beer.

Scott McNealy cofounded Sun Microsystems in 1982 and has been CEO since 1984.

Julia Stewart

President and CEO IHOP Corp.
Glendale, California
My wisest move -- and I'd recommend this to any new CEO -- was spending my first year getting acquainted with our brand and the people behind it. I have 365 franchisees, nearly 1,100 restaurants, 300 corporate employees, and more than 40,000 people. I'm visiting as many restaurants as I can. In our revitalization effort, I'm working to involve everyone: general managers, corporate employees, the executive team, the board of directors, but most of all the franchisees.

I'm also going from region to region with a small group of franchisees. I make it a point to cook and wait on tables, to spend time "in the back of the house" with the folks who do the work every day. I've learned so much. More than anything, I've learned how strongly our customers and our employees feel about this brand. People love the fact that they've had the same server for 18 years. There are plenty of things that we can do better: new foods, new flavors, stronger advertising. But we are a 45-year-old American icon. We're genuine. That's a great strength on which to build.

Julia Stewart began her career in the food-service industry as a server at IHOP 32 years ago. She has since held executive positions at such companies as Taco Bell, Carl's Jr., and Applebee's. She rejoined IHOP as president in 2001 and was named CEO last May.