Ivan Seidenberg

It's good to be a dinosaur, says Ivan Seidenberg, president and co-CEO of Verizon. Paraphrasing a Microsoft counterpart, he adds: “I don't understand why people mind being called a dinosaur when they ruled the earth for 150 million years. We've always felt we had a place at the table, and we never felt we were going to become extinct.”

His attitude is shared by Charles Lee, chairman and co-CEO. The roughest part is behind Verizon. Nearly a year after the merger of Bell Atlantic and GTE, the company has blended clashing corporate cultures, released some employees and weathered a union strike.

Today Verizon is concentrating on a few critical areas: wireless, data, long-distance — specifically enhanced services — and international markets. “For us to be a full-service provider, we have to be every bit as capable in data as we are in wireless,” Lee says.

Wireless is the fastest-growing segment of Verizon's business, and it will continue to grow. Unlike William Esrey, who says Sprint has enough spectrum for its purposes, Lee says Verizon will continue to acquire it.

“I'm glad to hear Bill saying that,” Lee says. “If I'm right about the use of wireless in the future, he will have a constraint as to how many customers he can serve, and that will be more customers for us.”

Verizon is also pulling back in a few areas.

Verizon is not looking to wheel and deal. As the market goes through another round of consolidation, Verizon will be a spectator, Seidenberg says.

The company, which has Section 271 approvals to offer in-region long-distance in New York and Massachusetts, has begun to build international links to maintain traffic and boost revenue. Ultimately, Verizon hopes to be able to handle 40% of the traffic going out of the U.S., Lee says.

Verizon cut $1 billion from its capex budget, but at $17.5 billion it's still the largest of any telco, says Lee. “Most of the cutbacks came in the form of demand that turned out to be less than we expected,” Seidenberg says.

Being an incumbent has advantages, including solid customer relationships and tried-and-true processes. But Seidenberg says speed to market is hard for a company Verizon's size. “We are so big, and expectations are so high. If we roll out digital cellular, people expect it to be there,” he says.

But despite flagging economic times, employee morale “is 100% better than it was at the time of the merger, and it's continuing to get better,” Lee says.

The company worked hard to keep employees happy. Stock options were offered to every employee, and the co-CEOs remain visible to the rest of the company, Wall Street and the media, Lee says. “The most important thing I've found in Wall Street is integrity. Ivan has that reputation and I believe I do, too.”

That might give Verizon credibility, but it doesn't help the bottom line.

Verizon's financials are a bit sluggish, but revenues are up — if only in the single-digit range. The stock took a hit last fall but has climbed since. It now trades in the 50s. The stock's progress measures well above the Nasdaq but is in line with the Dow.

“We're undervalued. We're meeting our targets,” Lee says. “Did Wall Street get ahead of itself in pricing some of these dotcoms? Absolutely. They could be wrong now, too, in terms of going the other way. They are wrong in the case of Verizon because they haven't yet given us enough value for our company and what we can do going forward.”

Seidenberg is more succinct: “You have to run your business. As long as we're doing relatively better than everyone else, we're fine. It's only if we're at the bottom of the pile that life gets miserable.”

Lee is certain Verizon won't falter, even as tough times prevail.

“There is absolutely no doom and gloom in the telecom industry,” he says. “There are going to be winner and losers. We're transforming this company and our strategy for the 21st Century. We're going to be one of the winners.”