AT&T Boosts Dividend, Launches Buyback and Expands TV Push

In a nod to its recent success and an expression of confidence in its future, AT&T will boost its dividend by the largest amount ever and buy back as many as 400 million shares of its own stock.

The AT&T board of directors voted to increase the company’s quarterly dividend rate from 35 US cents per share to 40 cents per share. On an annual basis, the dividend rate rose from $1.42 to $1.60 per share, an increase of 12.7 percent — the largest annual boost in the company’s history.

The board also approved a massive stock buyback program, authorizing the 400 million share purchase, which would represent 7 percent of the total outstanding with a value of just under $16 billion worth of stock at current prices.

Growing the Business

AT&T will exercise the right to buy back shares based on trading prices and other market conditions between now and the end of 2009, it said.

The telecom giant said it already bought back $13 billion worth of its own stock through a program that ended earlier this month.

AT&T shares moved higher by more than 6 percent on the news to $40.30.

The action “reflects the strength of AT&T’s operations, and our board’s confidence in the future of our business and our ability to continue to deliver strong results,” noted AT&T CEO Randall Stephenson. “AT&T has great assets in a growth industry, and we’re excited about the opportunities we have to continue to grow our business while also delivering value to shareowners.”

Masters of the Universe

Indeed, the moves seem to underscore how well AT&T has navigated the massive wave of consolidation that hit the telecom sector over the past five years, which saw the onetime phone monopoly rebuild itself through the rollup of regional carriers as a national wireless powerhouse.

AT&T and Verizon have used the consolidation wave and the aftermath to separate themselves from the rest of the pack in the telecom space, industry analyst Jeff Kagan told the E-Commerce Times.

“AT&T has excelled by taking advantage of the consolidation trend that is changing the telecom industry,” he said. “Ten years ago, it was the smallest Baby Bell, and today it is the largest, and it is selling all the services — telephone, television, wireless and Internet.”

Most recently, AT&T has benefited from the partnership with Apple on the iPhone, which has helped boost an already strong wireless unit. AT&T has signed 2 million users to two-year iPhone contracts and the gadgets users are producing higher monthly revenue for the carrier because they are more likely to use data services than other subscribers.

“Wireless is a big part of that mix, but other parts of the business like business services and Internet products are also growing quickly” for both Verizon and AT&T, Kagan added.

Second U-Verse

The buyback likely suggests AT&T is not about to pull the trigger on a long-rumored acquisition of satellite TV provider Dish Network. Instead, it seems committed to investing billions in rolling out its fiber-optics network capable of delivering video services.

Such services are a key part of the long-range growth plan for all telecoms, especially because some parts of the wireless business are maturing rapidly, Yankee Group analyst John Jackson told the E-Commerce Times.

“Right now, wireless is the growth engine, but that won’t last forever,” Jackson said.

Raising Targets

Video service is one area where AT&T has lagged behind Verizon. The company had 126,000 customers for U-verse at the end of the third quarter, below where it was expected to be at this time.

However, AT&T is raising its targets for how many potential users its U-verse video service will reach by the end of 2011, Stephenson said. The company now says 30 million customers will have access to U-verse by that time.

“Verizon has an early lead into more markets with their FiOS (Fiber Optic Service) product, but AT&T looks like they are getting ready to make up for lost time in 2008,” Kagan said. “Through all the change during the last few years, AT&T seems to be batting one thousand. It will be interesting to watch the next few quarters and years unfold.”

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Implementation of a New CRM Should Be Easy

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When CRM implementations fail, it's often because the product and its setup process are too complicated, time-consuming, and difficult for users to buy in. (Image Credit: Zoho)

Did you know that a third of all CRM implementations fail? That’s the conclusion of research cited by the Harvard Business Review. The same study found that one of the main reasons CRM implementations fail is that they’re too complex and don’t have a clear focus.

This is hardly surprising. Many CRM applications are highly complex. Migrating data to a new CRM, and getting everyone to use that CRM, is an involved task at the best of times. And the way many CRMs are built, and the way they require users to interact with them, means that implementation really isn’t the best of times.

The Problem With Piecemeal

Many CRMs consist of different applications that have been bolted together through a process of mergers and acquisitions. This makes the initial implementation complicated. Technical and line-of-business staff are forced to interact with different elements of the system in different ways, which makes the learning curve steeper.

It can also lead to duplication of effort, and asking people to repeat time-consuming tasks is sure to cause frustration and put them off using the system. A CRM implementation relies on engaging with and convincing users, from the C-suite right down to the people on data entry.

The more difficult that process is, the less users are likely to complete it. And even if they do complete the initial data migration and set-up, if your users find the CRM complex, disjointed, and time consuming, they won’t keep it up to date. This is possibly the main reason why CRM implementations fail: users simply refuse to use the new platform. As a result, the data it contains soon becomes outdated and incomplete.

So, what’s the best way to avoid this and ensure your investment in a new CRM pays off?

For a start, the CRM you choose should consist of applications and functions which have been designed from the ground up to work together. Migrating data should be easy, and wherever possible, users should only have to do it once to get their data populated to all relevant apps with the right permissions.

Companies should also look for signs that the relationship will be based on trust, right from the start. For instance, if the CRM vendor wants to charge a lot of money to help you overcome the complexity of the integration process, that’s potentially a sign that they view their customers as an ATM.

Users should find the CRM easy to get to grips with. Entering data should be an intuitive process that fits organically into each workflow. It should also be quick to do. Only this way will it become second nature to your colleagues, so that the data in the CRM is kept constantly up to date, making it relevant and actionable.

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Designed for Success

To make these benefits a reality, it usually works best if a CRM has been developed as an integrated and seamless whole. At Zoho, all the features and functions in our CRM suite have been built, not bought, by our own development teams. And they are all designed from the concept stage onwards to work seamlessly together.

This level of integration results in a smoother implementation process. We calculate that the average implementation of Zoho CRM takes 50% less time than it would to implement our closest competitors. Over the last two years alone, we have helped users implement our CRM 30,000 times.

With the right technology, the right approach and the right partner, your CRM implementation won’t just succeed. It will give you the agility your company needs to respond faster to changing customer trends and preferences, in a market that evolves more rapidly with every passing day.

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Software is our craft and our passion. At Zoho, we create beautiful software to solve business problems. We believe that software is the ultimate product of the mind and the hands.

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The Salesforce Way

Salesforce Tower in New York City

If you are reading this, you know Salesforce at least superficially. If you know the company just a little bit better, you know it is over twenty years old and practically singlehandedly invented cloud computing.

Other companies that get a shout out for being early to the cloud include Amazon, but they built and maintained their instance of cloud for their private use. Amazon inspired companies like Salesforce. The rest is not history but current events.

Aside from the basics of cloud computing, Salesforce seems to have invented or reinvented much of today’s business environment and best practices. That’s not hyperbole — and it points to a potentially bright future for global business.

When Salesforce got started it was dogma that the corporation existed for the benefit of the shareholder, period. Part of twentieth century business history documents the push and pull between those who believed in shareholder supremacy and those who believed that customers, labor, partners, local communities — stakeholders — had skin in the game and also deserved love.

Defying Cost-Cutting Mentality

Beginning with a famous case Dodge v. Ford — the Dodge brothers were Ford shareholders — courts have generally sided with shareholders that excess cash should be returned to shareholders in the form of dividends and stock buybacks. The idea survives to the present day with the unfortunate result that companies don’t adequately fund activities like research, development, employee training and the like.

In the post-war period accountants focused on tight financial controls and wrestled company management away from the inventors and engineers who made products and tried to perfect them.

Figures like Robert McNamara famously remade Ford in the image of the bean counters to the detriment of the “car guys,” their products, and ultimately their customers. McNamara’s proteges and descendants infiltrated American business and left us with what we have today: too many businesses run by bean counters focused on cutting costs.

In that environment Salesforce has bucked the tide and thrived.

Salesforce on Wall Street

When Salesforce championed the subscription model, Wall Street couldn’t initially wrap its head around it. The Street was highly skeptical of any business’s ability to make money charging by the week or the month. Big deals, the kind that pump up a balance sheet, weren’t plentiful and so subscriptions were suspect. That’s nothing compared to the quizzical looks Wall Street gave when discussing a category of software focused on the customer.

Salesforce was also very early to the party in reconsidering shareholder primacy. It seemed to them, as a CRM company that attending to other stakeholders just made sense. So, they attended to all parties, built software systems to assist in the effort and proselytized to the world about the importance of other stakeholders.

Another way Salesforce has been different has been in its approach to mergers and acquisitions. In a world where at least half of all mergers fail, the vast majority of Salesforce mergers succeed brilliantly. One metric to consider is how many companies want to be acquired by Salesforce. I do not recall the words “hostile takeover” and “Salesforce” ever being uttered in the same breath.

Today Salesforce’s mergers are easier than ever because of prior mergers such as MuleSoft (an integration tool) and the Salesforce platform upon which many acquired companies and candidates have built their products. Vlocity would be a good example.

My Two Bits

Salesforce’s success was not pre-ordained. It came in the era just after the bean counters devastated Hewlett Packard and Xerox, two powerhouses that invested heavily in research and development. Bean counters more or less decided that all that spending on new product development would better serve their plans for dividends and buybacks. Neither company retains its greatness from mid-century nor is it likely to regain it.

To me Oracle looks threatened in the same way. In order to keep corporate raiders at bay the company has repurchased billions worth of its stock and pays out hefty dividends to keep its stock bobbing like a cork on the sea of Wall Street.

I am happy to say that in my career as an analyst, the questions I have tried to answer dealt primarily with how and how well software worked, not about how much money a company made. That said, it’s hard to deny a feeling of I told you so when Salesforce announces earnings. According to its earnings announcement for its Q2, year over year revenues were up an astonishing 24.28% at $7.41 billion — easily beating Wall Street estimates, a regular occurrence.

The company with a radically different product strategy, and a business model that included all stakeholders, continues to do well and to teach those of us willing to learn how business can be done better in the twenty-first century. What’s next is anyone’s guess. Hopefully the bean counters will keep a respectful distance.

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.

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