Telekom CEO fights back

The head of Deutsche Telekom took the rare step of placing a full-page letter in German newspapers to deny his company is on the skids. Chief Executive Ron Sommer's action was aimed at ending talk of a crisis at Europe's No. 1 phone company. He was responding to a 21 percent stock-price decline in the week after a controversial sale of a block of shares. His open letter to investors said the battering the shares had taken was in stark contrast to the company's operating performance and strategic position, concluding that "the shares have lost value, but not substance". To try to demonstrate the company's strength, Sommer gave investors a preview of Telekom's first-half trading perfomance, which won't be reported in detail until August 28. He wrote that group profit rose more than 20 percent in the first six months, excluding one-time factors such as expenditure on its purchase of VoiceStream in the U.S. and the cost of buying a third-generation mobile-phone license. In addition, group sales were up more than 17 percent. And in the mobile phone business, operating profit more than doubled compared with the first half of 2000. This would be the fourth straight report in which Deutsche Telekom had either met or exceeded the forecasts of investment analyts, Sommer said.