Bland must let BT's best win through

THE silence from British Telecom is deafening. It is now almost eight months since Sir Christopher Bland arrived from the BBC to take the chair at the telecoms group. And it is almost two months since Sir Peter Bonfield finally admitted that he was planning to cut short his tenure at the company.

A few days later, the company's finance director Christopher Hampton said that he, too, would be quitting - as soon as a replacement could be found.

As BT's year of trauma and distress draws to a close, we approach a new year that promises to offer some fascinating comings and goings at the top.

Yet, remarkably, with just a few weeks to go until Bonfield leaves, there is not the merest whisper of who might replace him.

Certainly, Bonfield's departure was arranged in something of a hurry. Bland said at the time that 'it would be nice, but demanding, to have somebody to take over on February 1', the day after Bonfield officially goes.

Nevertheless, it is striking that we haven't heard even the slightest murmur about anyone being lined up as a replacement. It is now inevitable that there will be a hiatus after Bonfield leaves.

This raises two fascinating questions. First, why are the headhunters facing problems?

Those in the know suggest there is still a perception that, despite all its recent changes, BT is still a company bound by its past. Its management structure is sclerotic. Trying to run an ungainly outfit such as this is challenging at best and thankless at worst.

Furthermore, there is the daunting presence of Bland. He can be abrasive. And anyone who has seen him at work over the past decade or so would agree he is not the sort to sit back and watch others get on with it.

Any candidate for the job of chief executive would worry that Bland would give him or her little free rein to do the job. Anyone worth their salt wants to know that the job will involve more than just doing the chairman's bidding.

And that ties in with the second question: does it matter that BT will have a period without a chief executive? In the short term, probably not.

No doubt Bland and the rest of the BT management structure - despite any shortcomings it may have - can keep the corporate machine ticking over. But if, as the rumours suggest, the company is finding it hard to recruit because candidates worry about being under Bland's thumb, then it is a genuine problem. Bland owes it to the company's shareholders - who have put up with an awful lot over the past couple of years - to ensure that the group can pick from the cream of the crop in choosing a new chief executive.

This is doubly important when the company will face disruption with the appointment of a new finance director some time between now and November. Bland is an effective manager, yes. But he needs to show that, when necessary, he is prepared to let others show their mettle, too.

BARTON Biggs is an unapologetic bear. He is quite as tough as you would expect of an ex-US Marine.

He has oodles of experience on Wall Street, having joined Morgan Stanley's research department three decades ago. And when all about him were becoming infatuated with the world wide web, Biggs had the courage to declare that air conditioning was a more important invention than the internet. (An exaggeration? Maybe, but the sentiment was right).

Biggs is at it again. The Dow Jones index last week nudged 10,100 for the first time since the beginning of September as investors apparently decided that the US recession would end as quickly as it began.

But Biggs sounded a word of caution. 'The consensus believes that monetary and fiscal stimulus will work, and that this cycle is no different from its last two or three predecessors,' he wrote in a note to clients.

'By contrast, I believe that lower interest rates and liquidity won't revive the American consumer, who is wounded and will remain impaired for several years.'

More specifically, Biggs says that 'it is pure madness that the tech bubble is being inflated again'. Shares in plenty of second division technology companies are changing hands at prices of 50 times likely earnings.

Biggs is worth listening to. He keeps coming back to the inescapable point that American consumers are feeling sore having seen $4 trillion of their stock market wealth blown away since the market peaked.

And given the economic situation in Europe and Japan as well as the US, companies lack what is euphemistically called 'pricing power': in other words they can't increase their profit margins by persuading us to pay high prices.

As we report opposite, the Federal Reserve is likely to cut interest rates this week to their lowest in 40 years.

Great news - if you want to borrow dollars. But don't count on it being enough to make the stock market sing.