CAN IT really only be four months since Dick Brown walked out ofCable & Wireless? At the time, the general view was that the Texan'stwo-year tenure as chief executive had been a success. Now thepicture looks rather different. A 23-page lawsuit, filed by C&W in acourt in Delaware, places a huge question mark next to the USinternet business it bought from MCI Worldcom for $1.7bn lastSeptember. At the time Mr Brown, with his usual restraint, hailedthe deal as a "huge leap". It now appears he was sold a pup. SinceC&W took control revenue growth has slowed, service quality hasslumped, and customers have been leaving in droves.
C&W claims this is all MCI Worldcom's fault. The US group hasallegedly breached the terms of the agreement with C&W by nottransferring enough staff, attempting to poach customers, andgenerally making life difficult for the new owners. However, thisraises questions about Mr Brown's supposedly legendary deal-makingskills. Signing an agreement that relied so heavily on MCI - oncedescribed as a law firm with a satellite dish on the roof - wasperhaps asking for trouble.
All this means relatively little for Mr Brown, safely ensconced atEDS' headquarters back in Texas (although EDS shareholders may wantto take another look at the strategic alliance Mr Brown signed withMCI Worldcom, to great acclaim, back in January). For C&W, however,it further stretches the odds of it surviving as an independentcompany. Sure, C&W may win the case. But in the fast-forward worldof the internet C&W has already lost vital ground to its rivals. Noamount of damages will ever enable it to recover that ground.C&W shares lost less than 3 per cent of their value yesterday,reflecting the market's belief that they are trading at a discount tothe value of C&W's assets. Mr Wallace may have little choice but torealise that value by breaking up the company. If he doesn't do it,somebody else might.
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