Mueller Time

As a longtime Bell guy, Qwest Communications' new CEO, Edward Mueller, is likely to avoid the kind of culture clashes ignited by his predecessor, Joe Nacchio.

Outgoing CEO Richard Notebaert spent most of his time rebuilding two pillars laid low by Nacchio's regime: customer service and financial health. While Mueller will have to continue that work, he'll also have to grow the company's top line as cable rivals continue to gain share in the near term.

That growth may be easier to achieve outside Qwest's local service footprint than inside. Although Mueller said on his first day that he doesn't have any immediate M&A plans, Qwest has pursued national competitive carriers before and may do so again on his watch, analysts said. Mueller has plenty of personal experience integrating acquisitions, having seen a few at SBC; he also sits on the board of a year-old ad hoc firm that acquires distressed companies.

“He looks like sort of a Mr. Cleanup,” said Donna Jaegers, an analyst for Janco Partners. “He was always at the companies SBC bought, cleaning them up. He probably has a more realistic view of M&A, realizing how much dressing up companies do in order to get acquired.”

While Mueller's promises of “business as usual” appear to have soothed Wall Street — one analyst upgraded the stock last week, confident that Mueller won't sink large amounts of capital into fiber access upgrades like FiOS or U-verse — some analysts wonder if the satisfaction he voiced last week with Qwest's satellite-partnership video strategy is good for the company in the long run.

“Perhaps Wall Street is more interested in the quarter-to-quarter story, but in the long term, Qwest really needs a strong wireline video play, especially in densely populated areas,” said Larry Hettick, an analyst for Current Analysis.