Bloomberg from yesterday (wasn't here posted yet)
AT&T's Annunziata Leaves to Head Global Crossing
(Update1)
Bloomberg News
February 24, 1999, 12:13 p.m. PT
AT&T's Annunziata Leaves to Head Global Crossing (Update1)
(Adds analyst comment in 4th paragraph, details on AT&T's
Keith in 8th and 9th paragraphs. Updates stock activity.)
New York, Feb. 24 (Bloomberg) -- AT&T Corp.'s Robert
Annunziata, who oversaw $22 billion in annual revenue from
business services, quit just eight months after rejoining the No.
1 U.S. long-distance phone company to become chief executive of
Global Crossing Ltd.
Annunziata, 50, joined AT&T in July when the long-distance
provider completed its purchase of local company Teleport
Communications Group, where Annunziata was chief executive. He
began his career at AT&T and spent 17 years there before moving
to Teleport in 1983.
The departure comes at a critical time for AT&T, as it
integrates several acquisitions and slashes billions of dollars
in costs. Some analysts say the efforts of AT&T Chairman C.
Michael Armstrong to turn the company into more nimble competitor
could be slowed by such turnover in top management.
''AT&T continues to have a challenge in retaining its senior
talent,'' said Brian Adamik, an analyst at the Yankee Group in
Boston. ''Armstrong needs to develop the nucleus of his
management team and some stability.''
One of Armstrong's goals is to boost revenue of the New York-
based company at a faster rate. Under Annunziata, revenue from
business services rose 4.7 percent in the fourth quarter, causing
the company to fall short of its goal of a 5 percent to 7 percent
increase for the year.
Global Crossing, which is based in Hamilton, Bermuda,
provides phone services over undersea fiber-optic networks. It
said Annunziata will replace Jack Scanlon, 57, who will become
vice chairman and lead the company's plan to expand
internationally and sign up new customers.
Global Crossing shares rose 3 3/8 to 57 in late trading,
while AT&T fell 13/16 to 85 1/8.
AT&T Management Departures
Michael Keith, a 21-year AT&T veteran, will succeed
Annunziata as president of AT&T business services, the third
executive to have that title in about 14 months.
Keith, 50, was previously executive vice president of
business services and served as interim president of business
services after Jeff Weitzen left last January to become president
of computer maker Gateway 2000 Inc. Keith will also join AT&T's
executive committee and report directly to Armstrong.
Annunziata is one of several top AT&T executives to leave
since Armstrong took over in November 1997. Gail McGovern, who
was head of AT&T's consumer operations, left the company last
year to join Fidelity Investments. Weitzen left in January 1998,
and Jack McMaster, who took over for McGovern, left in November
to head rival Qwest Communications International Inc.'s
international business.
Just two weeks ago, AT&T announced another management shift,
saying Armstrong would take direct control over operations at
Tele-Communications Inc., the No. 2 U.S. cable-television company
that AT&T is set to acquire this quarter.
''All these management changes increase (investors') risk
going forward,'' said Scott Wright, an analyst a Fahnestock & Co.
''This increases the chance that all the gears aren't going to
match when they have to.''
As part of that shift, Armstrong will also oversee AT&T
Business Services, which provides services to corporations.
Still, Annunziata's departure wasn't a surprise to some
analysts.
''People who are in startups and sell out to big companies
don't always stay,'' said Robert Wilkes, an analyst at Brown
Brothers Harriman & Co. ''I don't think there's been any major
shift'' at AT&T.
Global Crossing
Annunziata is going to a company that has been at odds with
AT&T in the past.
Last month, an AT&T-led group told U.S. regulators that its
planned $1 billion undersea fiber-optic cable between the U.S.
and Japan will boost competition for telephone and data traffic
and should be approved quickly.
Global Crossing had asked the U.S. Federal Communications
Commission to carefully review the plan of the AT&T-led group of
33 companies, saying it will stifle competition because so many
companies are cooperating instead of competing. Global Crossing
is building its own U.S.-Japan cable.
The company is hoping to tap Annunziata's experience at AT&T
and building Teleport to grow its business and boost its stock
price.
''Bob Annunziata is a world-class entrepreneur who has over
30 years operating experience in the telecommunications industry
and a track record of creating substantial shareholder value,''
said Global Crossing's founder, Gary Winnick.
Shares of Global Crossing have tripled since the company
went public at $19 on Aug. 14.
Global Crossing was founded in March 1997 by Pacific Capital
Group Inc., a Beverly Hills, California-based merchant bank run
by Winnick, a billionaire financier who once worked with Michael
Milken at Drexel Burnham Lambert's high yield or ''junk'' bond
group. Pacific Capital and affiliates own about 25 percent of
Global Crossing, according to a recent Securities and Exchange
Commission filings.
Global Crossing plans to begin providing service on its U.S.-
Japan undersea cable in March 2000. The company will compete for
customers with the group led by AT&T, which has said its cable
will be ready by the middle of 2000.
Both high-speed undersea cables will be able to handle
millions of simultaneous telephone calls and boost capacity for
phone and Internet traffic between the U.S. and Japan. In May
1998, Global Crossing began providing service on a cable
connecting the U.S. and the U.K., and it plans a network to
connect 100 cities in the U.S., Europe, Asia and Latin America.
--Andrew Brooks, Colleen McElroy and Monique Wise with Alan M. |
