InformationWeek: The Business Value of Technology

August 21, 2000

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Phillips: Morgan Stanley's Man In The Know

By John Foley

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Phillips: Morgan Stanley's Man In The Know

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n the weekend before Computer Associates' Aug. 7 disclosure that Charles Wang was turning over his CEO position to CA president Sanjay Kumar, Morgan Stanley Dean Witter analyst Charles Phillips was working the phone and E-mail. Phillips was hounding CA's senior VP of investor relations, Doug Robinson, to get details on the pending announcement, a situation Robinson was all-too-familiar with. "When my beeper goes off in the middle of the night, it's usually Sanjay--or Chuck," says Robinson. "I call him the man who never sleeps."

Those late-night calls in pursuit of rumored corporate shake-ups, along with his omnipresence at industry events and his prodigious output of research reports, have earned Phillips a reputation for being among Wall Street's most plugged-in, aggressive, and knowledgeable technology analysts. "His reputation is well deserved," says Oracle CFO Jeff Henley. "He's a very intense, thorough researcher."

Phillips has the clout to get CFOs and CEOs to take his calls, and they certainly know how to reach him. Besides having his own easy-to-remember phone number (1-800-MR CHUCK) and Web site (http://msdw.com/mrchuck), Phillips and his executive assistant have a combined eight incoming phone lines. "He's very accessible," says Ryan Rathman, a Morgan Stanley junior analyst.

That's an understatement. The 41-year-old Phillips has a 1.5-Mbps connection running into his Manhattan home, and he's on the phone so much that his son sometimes imitates him by playing with an old cell phone. When interrupted, the 4-year-old once put an index finger in the air, saying, "I'm on a conference call." It's easy to see where he got the idea.

For the past five years at Morgan Stanley, and for eight years before that at other firms, Phillips has been following the strategies of software developers ranging from CA, Oracle, SAP, and Siebel Systems to up-and-comers such as E.piphany. He understands the technology better than most analysts, having worked in data processing as a captain in the Marine Corps after graduating with a degree in computer science from the U.S. Air Force Academy. He also has an MBA and a law degree.

That background has made Phillips an expert on virtually all aspects of the enterprise software market--including supply chains, logistics, and enterprise resource planning--at a time when those products are being used as platforms for electronic marketplaces. All of a sudden, Phillips has become a man to know in the booming category of online business-to-business exchanges.

The analyst helped bring together DaimlerChrysler, Ford, and General Motors in the formation of Covisint, the auto-industry exchange that's in development and, after one missed deadline, slated for a fall launch. Over the past few months, he's been an influential member of the Morgan Stanley team of bankers and analysts--and at times a direct adviser--on nearly a dozen other vertical-industry exchanges. He's also co-author, along with Morgan Stanley's renowned Internet analyst Mary Meeker, of a widely circulated 400-page report on business-to-business commerce.

From the 14th floor of Morgan Stanley Dean Witter's headquarters in New York, overlooking Times Square, Phillips and his research staff--nicknamed Team Chuck--produce a steady output of analyses on the financial results and strategies of software companies. Starting time is 6:30 a.m., but Phillips often arrives earlier and has been known to work past midnight, getting by, according to colleagues, on little more than popcorn, peanut M&Ms, and Coke.

A history, movie, and music buff, Phillips' written analyses are filled with eclectic references ranging from Clint Eastwood to merchant shipping in 16th-century Holland. Morgan Stanley's 400-page B-to-B report begins, "Hermes, son of Zeus, was the god of commerce for the ancient Greeks." Classic Phillips.

A managing director, Phillips has become a linchpin in Morgan Stanley's business-to-business practice, helping to educate and assist bankers who specialize in vertical industries but don't necessarily understand all the ramifications of E-marketplaces or the business opportunities they present. For companies interested in participating in these exchanges, Morgan Stanley provides what Phillips calls transformation services. "We disaggregate your value chain and figure out what things make money, what things you're not good at, and what alternatives are out there," he says.

How did Phillips, a software analyst, end up in a role as an adviser to entire industries? In part, it was a matter of being at the right place at the right time--it's his job to track E-marketplace platform vendors. Those who know him say Phillips added to that the experience and acumen to realize the broader implications of E-marketplaces. Says Phillips, "I saw the nucleus of the technology and started extrapolating from there.

Return to main story, "Banking On B-To-B."

Photo of Philips by Chriss Wade

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