GTE's earnings should be out on 10/15.
Other info.:
biz.yahoo.com
Monday October 13 5:27 PM EDT
AT&T faces choice between new life and status quo
By Jessica Hall
NEW YORK, Oct 13 (Reuters) - Three months into the search for a new chief executive, AT&T
Corp (T) is still struggling between tapping an outsider, who offers a new perspective, or choosing a
company man, who brings along baggage from the past.
The top candidates remain Hughes Electronics' Chief Executive C. Michael Armstrong and AT&T's
Vice Chairman John Zeglis, but industry experts are split in their view on how quickly AT&T could
come to a decision.
Some analysts expect an announcement within a week, while others said there are still too many
scenarios to be investigated for a decision to reached that soon.
''Everybody that I know thinks Armstrong would be the arch-angel of change. If they keep it (the
CEO job) inside, status quo will reign,'' said Frank Dzubeck, president of Communications Network
Architects Inc.
The Wall Street Journal reported Monday that AT&T may even make a bid to buy Hughes in order
to get Armstrong.
But industry analysts said when AT&T considered hiring Armstrong last year, it blanched at the
potential cost of breaking Armstrong of his so-called ''golden handcuffs.'' So, the thought of buying
Hughes to get him seems even less likely, analysts said.
''The problem with Armstrong is the size of his buyout. So, buying Hughes would be even more
negative,'' Dzubeck said.
AT&T may still pursue Armstrong, even if it decides that buying Hughes is not a wise strategic
move, analysts said.
AT&T, which has floundered over the past two years, must tap a new CEO and clarify its future
strategy.
''They've got a very tough assignment. It's a board of directors that hasn't shown a lot of backbone
in the past,'' said Scott Wright, a telecommunications analyst with Argus Research.
''I'd prefer to see someone from the outside.... Zeglis brings some baggage from AT&T from the
last decade. It's time for the company to make a break from the past...There's concern on the part
of the street that AT&T may be about to make another misstep in choosing the successor,'' Wright
said.
The telecommunications giant must choose wisely, but cannot afford a lengthy delay, since its
competitors are forging ahead with vigor.
Less than two weeks ago, WorldCom Inc (WCOM) bid for MCI Communications Corp (MCIC),
topping MCI's proposed pact with British Telecommunications Plc (BT.L).
''There's an interesting chess game being played out. WorldCom has accelerated the
decision-making process,'' Chris Landes, an analyst with TeleChoice Inc, a telecommunications
industry consulting firm.
AT&T has time to forge a strategy while MCI struggles with its two suitors, but ''the more they
delay, the more there is the possibility that another WorldCom-like scenario could come in and
make another play,'' Landes said.
AT&T declined to comment.
An acquisition of satellite giant Hughes would not get a warm reception from Wall Street, since
dosen't offer AT&T any technology or services it could not buy or lease at a lower price elsewhere,
analysts said.
Instead, some analysts suggest that AT&T should focus on acquiring a local phone company that
would offer an immediate presence in that market, analysts said.
AT&T has been rumored to have been talks with GTE Corp (GTE). An acquisition of GTE would
also be a way for AT&T to gain a new CEO as well -- GTE's chairman Charles Lee.
While industry consultants said the two companies are in contract, the Wall Street Journal said
Monday the companies only ''briefly'' discussed joining forces a few months ago.
The potential for an acquisition of a Baby Bell, information technology company or forming an
international alliance are ''all still very much on the plate,'' Landes said.
More news for referenced ticker symbols: GTE, MCIC, T, WCOM, and related categories and
industries: Computer-Telecom, computer, household, telecommunications, stock capsules,
international. |
