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Technology Stocks : AT&T -- Ignore unavailable to you. Want to Upgrade?

To: Skywatcher who wrote (2230)	4/27/1999 1:57:00 PM
From: polarisnh	Respond to of 4298

Nice write up! Armstrong At The Helm Guides A Rejuvenated AT&T NEW YORK (Reuters) - A scant 18 months ago, many on Wall Street and inside the helter-skelter telecommunications industry were wondering if AT&T Corp. (NYSE:T - news) would ever get it right. Sure, it was still the largest U.S. long-distance phone company -- actually, the largest U.S. telecommunications company, period -- but Ma Bell had done little or nothing to maintain her superiority in the years after the court-ordered break-up of the old AT&T telephone monopoly. AT&T was stuck in low gear and was not responding to, let alone leading, the breathtaking pace of change in its industry. Its market share was perpetually eroding, and it appeared to have no strategic plan in hand to lead it in any serious way beyond the confines of long-distance service or to jar it from the slow-to-no-growth rut it had ridden through the waning days of long-time Chairman Robert Allen's tenure. To make matters worse, finding a successor for Allen proved an unexpected ordeal. Heir apparent John Walter, an industry outsider who it had been hoped would ignite a new spirit at a company that that was no longer ''THE phone company,'' quickly fell out of Allen's favor. He was forced aside less than a year after coming aboard as president. Then, after a three-month head hunt, it lured aboard the Harley-riding C. Michael Armstrong, a one-time rising star at International Business Machines Corp. (NYSE:IBM - news) who had earned a reputation as a turnaround specialist during his stint as head of the Hughes Electronics Corp. division of General Motors Corp. (NYSE:GM - news) Ma Bell's been a different lady since. In the year-and-a-half since Armstrong's arrival, AT&T has become a star player, not a spectator, in the telecom arena. ''AT&T is finally innovating again,'' telecommunications industry analyst Jeffrey Kagan said. ''Until very recently AT&T has been more of a follower than a leader and innovator... In fact there really hasn't been much innovation coming out of Ma Bell since the Princess Phone and touch tone, until recently.'' Under Armstrong's direction, AT&T has cut its cost structure, shed 18,000 jobs and forged more than $82 billion in acquisitions and alliances aimed at advancing its positions across the spectrum of its operations and breaking into new businesses, such as cable television. On the local phone service front, where AT&T is weakest, it bought Teleport Communications Group Inc. In the booming wireless market, it bought Vanguard Cellular Systems Inc. (Nasdaq:VCELA - news) and launched an aggressive pricing plan that has shored up its position as the nation's largest wireless phone service provider. Armstrong struck a deal with IBM to take over Big Blue's global communications network, expanding AT&T's international reach and its small but fast-growing data transmission business. It has forged international service alliances with several of the biggest non-U.S. telecom companies, including British Telecommunications Plc, Japan Telecom Co. and Japan's Nippon Telegraph and Telephone Corp. (NYSE:NTT - news) . But its biggest coup under Armstrong has been its explosion onto the cable television scene, first through the purchase of Tele-Communications Inc. (Nasdaq:TCOMP - news), which in a single $55 billion swoop made it nation's No. 2 cable TV operator, and now through its surprise bid to steal MediaOne Group Inc. from Comcast Corp. (Nasdaq:CMCSA - news) . Should its $58 bid for MediaOne succeed, AT&T would supplant Time Warner Inc. (NYSE:TWX - news) as the nation's top cable TV company. But Armstrong's plans for TCI and MediaOne go well beyond the cable TV business. The deals in effect are a $100 billion-plus gamble that he can convert their vast cable infrastructures into the footing for a major thrust into the $90 billion local telephone market. It would be a move that would put Ma Bell in her first serious head-to-head competition with her Baby Bell offspring. Further, through TCI, AT&T has gained a significant foothold on the Internet because TCI came with a stake in AtHome Corp., the fast-growing cable-based Internet service provider. Critics still blast AT&T for neglecting its fundamental residential long-distance phone business, but Armstrong appears unmoved and acted recently to dump thousands of unprofitable customers. The result? AT&T revenues, long stuck in flat-line mode, are rising more in line with its top rivals as investments in new businesses begin to pay off and profits are up, too. First quarter profits, released Tuesday, rose 39 percent, soundly beating market expectations. ''AT&T is finally making the big bold moves it needs to make to compete in the future. If they can execute, they will thrive,'' Kagan said. ''If not, they will flounder. So far, so good.''