Murray Wallace has fashioned an impressive resume by bailing out sinking ships in the financial services sector.

But his greatest challenge may lie ahead of him in the high-stakes, high-tech sector.

After authoring turnaround stories at three financial services companies – Royal Trust, Wellington Insurance and Avco Financial Services – Wallace teamed up with longtime associate Art Price in 2000 to tackle the formidable task of honing Calgary high-tech enterprise Axia NetMedia into a profitable mainstay in the world of telecommunications and e-learning.

Judging by Wallace’s strong track record, it may be unwise to bet against the 56-year-old father of four.

Axia NetMedia photo
Axia NetMedia president Murray Wallace says the high-tech company is slimming down its business interests to concentrate on long-term prospects.

Wallace, president of Axia, was interviewed from Axia’s Toronto office on a day when shares in the company, once a high flyer that traded up to $15 during the tech boom three years ago, sank another nickel to 55 cents. Yet, even that failed to dampen his enthusiasm.

1. Who was the mentor who set you on the road to a successful financial services career?

“Early on, it was my father. I wanted to be a phys-ed director, and I wanted to go to the States somewhere and play football. Anyway, he was smarter than me and said: ‘No, you’re going to Saskatoon (University of Saskatchewan).’ My parents both worked hard and they pushed their two kids to go to university and put their heads down and work hard. My dad was a grain buyer (Canadian Wheat Board) and also worked for the Saskatchewan Liquor Board. I played football for the Huskies and spent most of my time as the second-string quarterback. But that was good humility treatment.”

2. How did you initially hook up with Axia NetMedia CEO Art Price in managing Axia?

“Art asked me to give him a little help for three or four weeks and that was about 2 1/2 years ago. I was always interested in a wide range of businesses and Art and I were associates for many years, both being on the board of IPSCO. We were always talking about Axia after Art got involved there, and I saw it as a very intriguing idea, way ahead of the wave. I like doing things that are based on breakthrough thinking and that’s what really attracted me to Axia – the fact that the whole world said broadband was too expensive to put into rural Alberta. Art discovered a business model that works and it’s really exciting, a major social innovation.”

3. What’s your view of the latest renegotiation of Axia’s contract and the settlement with Bell West on the Alberta SuperNet project?

“It was a bittersweet resolution. It’s certainly sweet in a sense that we were never designed to wind up financing that project and now we’re going to get those matters resolved. Also, we have completed or will continue most of the important work that is required on the network from a design and construction point of view. We remain involved as an adviser to (the Government of Alberta). That’s really our core business, doing that for enterprise customers, and then operating the networks as an outsource operator. Then, we will be the operator of the project for the province for the next 10 years.”

4. How do you see SuperNet affecting the future of Alberta?

“I think it’s going to be dramatic. . . By providing a level playing field for businesses, it’s an important economic lever as well as being an important government services tool. For many years, governments were told by the incumbent carriers that that service would be too expensive. Well, it’s too expensive if you don’t create a competitive model like the SuperNet has. The SuperNet will make the provision of these services economical anywhere in Alberta. That means it can be economical anywhere in Australia, anywhere in Ireland or anywhere in the other jurisdictions that we intend to do work in.”

5. Do you expect SuperNet to have a long-lasting impact on Axia’s future?

“Yes, I think so because Axia will have very little capital invested per se and its future will be aligned with each of its big customers. In the case of the Government of Alberta, as the SuperNet begins to create a bottom-line profit as more private-sector traffic goes on, the government loads its traffic on and the costs remain relatively flat, there will be a profit created over time. In the arrangement we have with the government, the lion’s share of the profit will go back to them so we cannot profit if the government doesn’t. So if you align your interests with your big customers that way, it’s the best possible way to succeed in the long term. So we’ll make good solid returns from what we’ve done, but only if we perform.”

6. How do you see Axia’s business evolving?

“We’re sort of slimming down from the number of businesses we’ve been in. On one hand, we’ll be involved in the provision of network solutions for big enterprise customers like we’ve done with the SuperNet. The second thing we’re doing is working with clients in the United Kingdom and other parts of the world which are using our interactive media services for e-learning and online training for productivity in businesses. That has been slower to develop, but that whole area of e-learning is going to explode in the next five years and Axia is very well positioned to be a part of that.”

7. How do you know it will explode?

“Anybody who has done surveys on spending intentions can tell you that. We’ve spoken to consultants and we’ve spoken to people at our partnerships such as Cisco, HP (Hewlett-Packard), IBM and Microsoft. All of them agree that once the market figures out how productive online service such as interactive learning is, the market will eat it up. John Chambers (Cisco chairman) said a few months ago that once the market figures out the power of e-learning, it will make e-mail look like a rounding error.”

8. What does Axia need to do to assure its long-term future?

“What Axia needed to do – there were two or three things. Axia needed to get its fiscal house in order, and that was largely a question of getting these matters resolved with Bell (a partner in the SuperNet), which are on their way to resolution. The second thing that we needed to do is focus our businesses so we are only in those that look like they had long-term potential. Axia grew based on a number of businesses being acquired, so not all of the businesses fit elegantly together, and it was really a matter of figuring out over the last three years or so which of those businesses were going to be viable in the long run. We have a number of assets up for sale right now and, once we’re through, we’ll emerge with a pretty clear focus on interactive networks and the interactive media products that go over their networks.”

9. When do you anticipate Axia becoming profitable?

“We don’t like to provide that kind of guidance because our business tends to come in big chunks when it arrives. We could be profitable in the short run for a quarter or two and then not (profitable) again, but once these problems with Bell are resolved and we get these assets sold, we believe there’s no reason why we won’t be profitable on a continuing basis.”

10. What message would you want to convey to shareholders who’ve ridden the stock from the $15 range to 55 cents?

“For the ones who’ve ridden it down from $15, I don’t know what I can say about the bubble that was. I owned a lot of stock at $15 that I didn’t sell as well. I think the point is that the capital markets will eventually recognize and acknowledge the value of our business model, but it will only come when we’re profitable on a continuing basis. And we’re working very hard to make that happen in the short run. The worst of our problems, having to do with our liquidity problems and so on, are behind us.”

11. How do you think you and Art Price complement each other?

“Art’s brilliant and Art is a big-picture thinker and a long-view thinker. He’s a good operator, but when you’re trying to build a company with a forward view to it, there’s always a lot of operational and financial matters that need to be attended to on a day-to-day basis. That’s what I try to do for him. It’s ironic, because for many years I was the CEO with three different companies and you’re used to filling that role yourself. He deals with a lot of the left-side-brain issues and I deal with a lot of the other ones.”

12. How would you describe your management style?

“I believe in delegated authorities, I believe in lots of high levels of involvement and I believe in letting people do their jobs and not getting in their faces. So does Art. We set the vision together, set the plan so that it makes sense and then get the hell out of the way, other than monitoring performance and seeing how you can help.”

13. How do you feel about the rash of scandals in corporate governance in recent years?

“I’ve been on the boards of public companies for 25 years and I personally have never seen any of that kind of behaviour with any of the companies I’ve been a director with. I’m on the audit committees of the boards I sit on and I can tell you that people generally go out of their way to make sure there’s no monkey business. Nobody wants to answer to the capital markets for having to restate profits or to be accused of accounting that is unclear. I think what happened with some of these companies is a combination of greed and larceny. It’s just straight-out dishonesty. The actual cases that are cited are shocking. I’ve never seen anything like it and the boards that I’m involved with look to all this new stuff (regulations) and say: ‘Rather than resisting it, how quickly can we get out in front of the parade so we’re never suspected of anything?’ There’s an old maxim in auditing that when you’ve got collusion involving a number of people, no regime on earth will catch it, right. So the real protection is making sure that boards select honest people to run those companies and that those people provide strong oversight.”

14. What’s your personal view of the kerfuffle in the business community over the federal government not supporting the U.S. war effort in Iraq?

“My personal view is that Canada has to have an independent view on matters like that. Whether this is the right one or the wrong one, it’s a little too complex to judge. But I would just say that Canada needs to have its independent view and it might not always be the right one, but we need to have one. I don’t think that Canada can afford to line up automatically with the U.S. or anybody else. Therefore, we need to be purveyors of, and holders of, independent thoughts.”

15. Are you concerned about any long-term repercussions from that for Canadian business?

“I don’t think there will be long-term consequences because, at the end of the day, dollars follow good ideas and I think that markets tend to have pretty short memories. I think there’s a lot of emotions surrounding these issues right now, but I think they will abate when the matters get solved.”

16. Do you see a recovery in the financial markets, and specifically technology, anywhere in the near future?

“I think that we could be in for a prolonged period of tough times on the one hand but, as always, you get a series of happy outcomes that encourage people to invest in the capital markets and elsewhere. When you take a look at what’s happening with money market funds and you take a look at where our pension plans are putting the money that is being checked off every month from the millions of people that are at work, that money eventually has to go somewhere and that somewhere eventually has to be equities. Nobody would try to predict specifically the time it happens, but I don’t think it’s around the corner.”

17. What are your proudest achievements in business?

“What I’m proudest of is being involved in three separate turnarounds, all of which were different. One was a company (Wellington Insurance) that was in deep, deep trouble, which went from being the worst in its field in performance to the best over five years. In the case of Royal Trust and Avco, they were companies that were in the doldrums and we created a powerful franchise for them and kind of separated them from the pack in their industry.”

18. What was the key to those turnaround stories?

“In each of those cases, it was done by using the power of the people in the trenches to make it happen. It was like WestJet, where the boss gets on the plane, cleans the seats, sits on a trip to Toronto talking to the customers and respects the front-line people. That’s the secret of business.”

19. What’s the best advice you’d offer a young entrepreneur?

“My advice is to get a very, very sound financial education because you’re going to be thrown to the wolves at some point and, secondly, to look for mentors who are known to be people who have a reputation for leadership.”

20. Who’s the business leader you most admire?

“I guess at this time, not wanting to mention anybody too close to home, I think that Clive Beddoe (WestJet CEO) is the guy I really admire for his style and what he has done in an industry where it was said that it couldn’t happen.”

THE COMPANY: Axia NetMedia Corp.
* Brass: Art Price, CEO/chairman; Murray Wallace, president; Peter McKeown, chief financial officer.
* Profile: Founded in 1995, Axia is a developer of high-speed telecommunications networks and
creator of advanced learning websites.
* Claim to fame: Axia has a 10-year contract with the province to manage the Alberta SuperNet, a high-capacity, fibre-optic and wireless network
that will link government offices, schools, health-care facilities and libraries in more than 400 Alberta communities.
* Stock price (AXX-TSX): 0.55 (52-week range, 0.47-$1.99).
* Website: www.axia.com
* Head office: 3300, 450 1st St. S.W., Calgary, T2P 5H1.
* Phone/Fax: 403-538-4000, 538-4100.

IN PROFILE: Murray Wallace
* Born/raised/age: Regina, Sask.; 56.
* Title: President, Axia NetMedia; CEO, Park Street Capital Corp.
* Education: Bachelor of commerce, University of Saskatchewan (with distinction); Chartered accountant.
* Family: Wife Janice, four children.
* Career: Prior to joining Axia in 2000, Wallace was instrumental in turning around three financial services companies – Avco Financial Services (president, 1993-98), Wellington Insurance (president, 1988-92) and Royal Trust (senior executive, 1984-87). He also provides financial management and investment advice through his own firm, Park Street Capital. He began his career in Regina in 1976 as Saskatchewan deputy finance minister, a post he held until 1979, and was president of Saskatchewan Government Insurance from 1979-82.
* Moonlighting: Wallace is a director with IPSCO,
Crown Life and Western Surety.
* Corporate hero: Clive Beddoe.
* Passions: Fitness, golf, community service.