by Max Brantley
I mentioned earlier that Roby Brock of Talk Business had an interview with Alltel CEO Scott Ford -- airing at 10 p.m. tonight -- on Fox 16 about the sale of the Arkansas-based wireless compay to the larger Verizon.
Here's Stephens Media's account of the interview. It recounts how Alltel had tried to grow, but was stymied in acquisitions, and how a failure to gain an additional wireless spectrum and the credit market contributed to the decision to sell.
Re workers' future:
But Ford also said during the interview that employees' careers might not be entirely in Verizon's hands.
He and Gov. Mike Beebe are working on a sequel, Ford said.
"If Verizon doesn't need them over the next 12 and 18 and 24 months, as people rotate out of Verizon, (Little Rock) would be a great place if you are an entrepreneur and you needed talented IT, marketing, finance, engineering people," he said. "This would be a great place to have a shop so you can tap into that resource pool."
Verizon is said to be considering maintaining a call center in Little Rock and possibly locating a regional headquarters, unlike a corporate headquarters, at Alltel's campus overlooking the Arkansas River. Many Arkansans with corporate functions with Alltel could be forced to move or lose their jobs.
After the announcement, Ford took a few days off and met with Beebe to discuss in depth ways to turn the loss of Alltel, a company deeply rooted in the state, into a positive for the community.
Ford's thought is to try to attract venture capital to the state to harness the abilities of Alltel's work force, which owners TPG Capital and GS Capital Partners tabbed the premier company among their portfolios worldwide, Ford said. The possibilities include attracting high-tech, knowledge-based companies from the coasts, he said.
"No promises," Ford said. "I don't know if it will come about or not," noting Arkansas' 7 percent income tax tends to deter venture capital to surrounding states, "but that's one of the things I'm working on."
Ford went on to say that, much as he felt tied to Arkansas, his first obligation was to shareholders (that would include himself, of course.)
"Now a lot of people in this town wish I'd not gotten that right," Ford said. "I understand that and there's part of me, just, you know, private citizen, that looks at it and says, 'You know, this is a terrible loss for Little Rock, if we lose 1,000 jobs or 1,500 jobs and a corporate headquarters.'
"That's a real blow and I hate that," Ford said. "I hate that as much or more than anybody."
A few things: 1) It sounds like the expectation of lost jobs here is every bit as real and dramatic as feared. 2) the state income tax didn't prevent the venture capital investment that put Alltel in the hands of a hedge fund that promptly flipped it 3) the remarks raised the question of whether Ford would establish a residence out of state as his father did to shelter tens of millions in gains from the 4.6 percent state capital gains tax. The tax is a benefit to the state that helped him make millions, a state where 3,000 people are worried -- not about sheltering gains -- but about hanging onto their very existence. Ford may be a canny businessman, but he sure is tone deaf. (I'm informed that my obervation about Ford's tone deafness was not the first: See Gwen Moritz in Arkanas Bsuiness.)
PS -- I now see Ford answered the question about his residency.
"This is not the most capital-friendly state in the union. We have to basically spot most of the states around us 7 percent just off the top of the bat. I'm not complaining, I pay my state taxes, I'm going to pay them, I'm going to stay right here, and I'm going to pay them until the day I die. I'm O.K. with it. But we can't be just blind to the fact that people that aren't from here look at that and go, 'I can live in Tennessee or Texas or Florida and I don't have to pay 7 percent income tax and if I move to Arkansas I do? Mmm, I think I'll take my capital to Dallas.'"
PPS re taxes: Because of generous accounting rules, multistate corporations rarely pay anything approaching 7 percent in corporate income taxes here. Their owners, who generally don't live here, aren't burdened by the rate on personal income. Other states with lower income taxes often are burdened -- as Texas is -- with higher property and franchise taxes that make the overall tax burdens comparable. In days when the income tax here was far more progressive against other states, it didn't prevent the creation of some highly profitable major corporations -- Wal-Mart, Tyson, Dillard's, Alltel, etc. This is a straw man argument by Ford, though it is an article of faith among those jillionaires who have the capital. They never have enough.