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Although his nose hadn’t been flattened yet, there was an in-your-face quality about Grubman that made you pay attention.
    My first noteworthy interaction with Jack came in March of 1988. We in investor relations got word that he had written a negative report on MCI. I had to scramble to get a faxed copy from a buy-sider who owned lots of MCI shares and was panicked about the report’s allegations. Using a heap of technical jargon that no one in the investment world could make head or tail of, Jack argued that Sprint’s network was far superior to MCI’s and that MCI had chosen the wrong technical path, with potentially disastrous implications. “We think Sprint will do to MCI what DEC did to Data General, surpass a supposedly better competitor by having superior technology,” he wrote. 1 Dense with detail and layered with so much techno-speak as to make it unintelligible yet impressive-sounding, the report had the effect ofdissing MCI without anyone understanding exactly why. It was a technique Jack would use again and again on the Street: overwhelm everyone with technical stuff and therefore make everyone else’s research appear shallow—and uninformed—by comparison.
    The president of MCI, Bert Roberts, read the report and went ballistic. “This jerk is not just saying he doesn’t recommend our stock,” he fumed, “he’s basically telling the world that we don’t know what the hell we’re doing!” Bert, an engineer by training, said there were tons of errors in the report. He told Jim and me to counter Jack’s “crap” with the facts and to make sure the buy-side and other sell-side analysts did not believe his conclusions. Longer term, we obviously needed to turn this guy around to our line of thinking. So while we would certainly try to discredit what was inaccurate, we’d also play a little bit of good cop–bad cop, wining and dining him and trying to change his attitude. That was the plan, anyway.
    Jim assigned me the task of dissecting the report and countering it point by point. My first move was to meet with MCI’s own engineers and come up with a list of inaccuracies. I found lots of them. Armed with my talking points, I called Jack.
    “Look,” I said, trying to keep my voice cordial, “I’ve talked with our engineers, and I’d like to run through a bunch of things with you.” I went through about six or seven points, explaining how his report stated that we were doing the opposite of Sprint when in fact we were actually using the identical technical approach. Jack listened carefully, or at least that was my impression. To my surprise, he didn’t even really try to debate me. “I’m really sorry,” he said, although he didn’t sound very apologetic.
    “How did you get this information in the first place?” I asked. “Why didn’t you at least run it by us to see whether it was true before publishing the report?”
    “I ran it by an engineer friend at AT&T,” he said, without a trace of shame. “He said it was a great report.”
    Now, I’m a pretty calm guy, but I almost lost it when I heard that. He had relied on someone who worked for AT&T, a competitor that would do almost anything to discredit our long distance service. Was this how Wall Street research was done, by relying on biased sources and unchecked assumptions?
    I was angry, but for a different reason than one might think. Of course, Grubman’s report would hurt MCI and make our jobs tougher. Even if he wrote a clarification, it would be difficult to erase the impression that he hadcreated in the minds of the brokers at PaineWebber, who had already been fed summaries of Jack’s conclusions, as they were with all research reports. They had already taken those summaries, chewed them up into even tinier bits, and, like a herd of cows with their cuds, redigested them for PaineWebber’s masses of investor clients, down to one basic message: MCI is in deep trouble; dump its shares.
    As irritating as that was, what