Fortune March 3rd,1997: Not a good one for AT&T...
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As they get ready to do battle with the Baby Bells, long-distance powers AT&T, MCI, and Sprint are finding novel ways to appeal to consumers. Take AT&T, whose market share has been dribbling away as steadily as its senior executives..........
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AT&T's Intriguing Executive Shuffle
Since last October, when AT&T appointed him president--to the puzzlement of all--former printing executive John Walter has acted like a cross between Salman Rushdie and Punxsutawney Phil. His set policy is to shun the limelight, but he pops up to make the odd pronouncement and then disappears underground again.
Recently he's been showing up to bid senior executives farewell, perpetuating a troubling AT&T tradition. Ma Bell counts among its dearly departed such notables as Netscape CEO Jim Barksdale and Alex Mandl, the former No. 2 who last summer moved to a startup for a barrelful of cash. On February 3, CFO Richard Miller joined the list, saying he would be leaving in March.
Perhaps the strangest of Walter's pronouncements came on the Sunday before Christmas, when news broke that Joe Nacchio, head of AT&T's consumer long-distance business and thus responsible for the bulk of AT&T's revenues and profits, would be leaving to run a small Denver long-distance startup called Qwest. Walter told the Wall Street Journal that at a meeting with Nacchio a few days before, he "took him out of his job," to be reassigned later.
The announcement is extraordinary for at least two reasons: for telling the world Nacchio had been demoted, thus humiliating a 26-year veteran--and for suggesting that CEO Bob Allen isn't really running AT&T. Allen did have heart surgery on February 6, but the company says it was elective and that it will have no impact on his performance.
Joe Nacchio says there's a third reason Walter's announcement is extraordinary: It's a lie.
"It is patently not true," says Nacchio. He maintains that the meeting in question was one that he called to review first-quarter strategy, and that he and Walter never discussed his future at AT&T. He says, "I'm not someone who falls asleep at meetings. If he told me he was taking me out of my job, I would have remembered it."
Nacchio opines that AT&T merely wanted to put a face-saving spin on yet another departure. He had been talking terms with Qwest for several months and informed AT&T immediately after signing the contract. It was that revelation, he maintains, that prompted Walter's remark. He says, "It's really a poor way to say goodbye to someone choosing to go on to a second career."
It certainly is. For much of the last decade, Nacchio had been the guy the company would trot out whenever it wanted to show that not everyone at AT&T was a lumbering Bellhead. Fast-talking, street smart, and aggressive, he was everything a monopolist wasn't supposed to be.
If he gets his way, he will come back to haunt AT&T. "Not all long-distance companies are having problems," he says--only the big, old ones. Nacchio claims that with its lower overhead and newer technology, Qwest's cost per minute for carrying long-distance traffic will be roughly half AT&T's. He ought to know.
So what does Walter say to Nacchio's version of his leave-taking? Nothing, at least directly. Instead, his PR department faxed a statement attributable to Walter. On the day in question, asserts Walter, he did indeed inform Nacchio, "a talented executive," that his job was going to Gail McGovern, head of business long-distance services.
As for Allen's role, a spokesperson says that Walter could not have made such an important personnel decision without Allen's support. But public dissing as parting shot? Not the sort of thing Allen would have done. |
