Jack Grubman, fashion victim.

The high-profile analyst has been many things during the well-chronicled rise and fall of the telecom industry. Now, he's merely another fallen icon from a bygone age in the investing world.

But industry observers say his ouster from Salomon Smith Barney speaks more to the shifting winds of a struggling industry than it does to the questionable practices of an extremely well connected investment salesman.

Grubman was certainly the right man at the right time for telecom enthusiasts riding his advice on the way up the late '90s bubble. Today, perhaps deservedly, he has become the magnet for a backlash in investor sentiment and late-to-the-draw political posturing. He is now but a villain in the give-me-the-head-of-a-sleazeball movie now playing on Wall Street, say analysts and investors.

"Many folks who are concerned about all troubles in the market will look at Jack as a symbol of what went wrong and find him a suitable target," says Bob Wilkes, a retired telecom analyst with Brown Brothers and former peer of Grubman's. "Given the fact that he was open about the conflicts between research and banking and the fact that he said he could manage that role, it now makes sense that he's a target for reformers to go after."

Parkay

But Grubman makes for an odd trophy.

While the legal and financial enforcement agencies heat up their scrutiny of Grubman, his role in the industry has never been more marginal, say investors.

As the telecom industry started to collapse two years ago under the weight of overcapacity and heavy debts, Grubman's influence faded as well. Buysiders and individual investors stopped heeding his often predictable, even laughable bullish calls on outfits like the failed Metromedia Fiber, coincidentally an outfit backed by Salomon parent Citigroup ( C). It wasn't until Metromedia's stock was closing in on $1 that Grubman dropped his buy rating.

And though Grubman became somewhat of a punch line to the industry's downward spiraling joke, investors still studied between the lines of his sales pitches, looking for some of the data or catalysts he may have been privy to as he straddled the banker/analyst role.

But before he developed intimate ties to top telco management, Grubman was best known as champion of the upstarts. In the late 80's, while at PaineWebber, Grubman was an early proponent of a risky business model that called for heavy financing and aggressive building and acquisitions to challenge the market dominance of AT&T ( T).

Little Guys

That approach proved timely and later became a wildly popular investment strategy as phone competition started to heat up with deregulation and the arrival of the Internet. Grubman didn't invent anything, but he certainly articulated the unfolding events well, say analysts and investors.

"Jack was a great scenario builder," says Wilkes. And if new players with huge debts needed anything most of all, it was a scenario where investors could see a pot of gold at the end of the rainbow.

Through most of the late '80s and '90s, that story worked. One of Grubman's early faves was a tiny long distance company named ALC Communications. In 1992, Grubman said the Birmingham, Mich., shop, which had been near bankruptcy just a few years prior, was one of best "hidden stories in the market."

ALC was later bought by Frontier Communications, and Grubman was eventually signing on with Salomon with a whopping $15 million starting bonus.

Of course, Frontier was later taken over by Global Crossing, which is now in Chapter 11 proceedings. And Grubman, well, it's reported that he can keep his $15 million bonus even though he would have had to give it back had he been fired over regulatory matters.

Jack be nimble, Jack be quick. Jack jumped over that candlestick.

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