Thanks to deregulation, when it comes to telecom Frederic Salerno has seen it all. Starting 37 years ago as a staff assistant at New York Telephone Co., he had risen to become Nynex Corp.'s vice chairman of finance and business development prior to its 1997 merger with Bell Atlantic Corp. He then served as Bell Atlantic's CFO until its 2000 merger with GTE Corp. New York-based Verizon Communications Inc., with $67 billion in revenues and $389 million in operating earnings in 2001, was the final product of all that consolidation. Salerno has been its CFO and vice chairman since the merger, but recently stepped down as CFO.

While deregulation was an exciting period that changed the complexion and tenor of the industry entirely, it was also a daunting period during which many telecom giants were born, some of which are showing signs of labored breathing. Still, Salerno believes the beleaguered industry is poised for a comeback "in a relatively short period of time" and notes that capital markets have returned to valuing companies on operating cash flows and not market share growth.

Salerno, 58, blames the capital markets for some of the sector's woes. If financial markets had not insisted on such unrealistic growth, the sector might not have engaged in "irrational pricing decreases" to gain market share, which, in turn, led to negative cash flow for some, he says. Those financially unsound firms then affected investors' views of the whole industry.