After slow start, AT&T has learned how to compete in a revamped world BELL BREAKUP: 10 YEARS LATER

December 26, 1993|By Michael Dresser | Michael Dresser,Staff Writer

AT&T won by losing.

The company that has emerged in the decade since it was separated from its local operating companies is far different from the plodding colossus known as Ma Bell. The culture that ruled the old Bell System has largely been purged. A master monopolist has transformed itself into a feared competitor.

AT&T's triumph wasn't immediately apparent. After the long war with federal antitrust authorities ended in surrender, there came a painful reconstruction.

Many Bell veterans had a hard time adjusting to a new, more competitive world. And others were laid off as the company cut the work force of its traditional operations from 373,000 to 230,150 as of Sept. 30.

"The human toll has been a difficult one for all of us -- particularly in a company that prided itself on career-long employment," said Robert Allen, chairman and chief executive of AT&T.

But the painful process has put AT&T in an excellent position to compete in the global high-tech marketplace of the 21st century.

"AT&T is a heckuva company," said Carol Wilson, editor of the trade journal Telephony. "They're going to be there, no matter where 'there' is."

AT&T is still firmly in first place in the nation's highly competitive long-distance market.

The former Western Electric manufacturing subsidiary, renamed AT&T Network Systems, is a leader in both global high-technology and the American consumer market. AT&T's recent deal to acquire McCaw Cellular Communications Co. positions it to compete as effectively in wireless technologies as it does in the wired world.

And after posting $3.8 billion in profits for its last full year, AT&T's stock is trading at more than three times its value on the first trading day after the breakup.

Perhaps the most striking change in the old American Telephone & Telegraph Co. is that it isn't so American any more. Ten years ago, its 373,000-person work force included about 100 employees outside the United States; now it counts 53,000. Almost a quarter of AT&T's 1992 revenue came from overseas ventures.

Meanwhile, AT&T's former monopoly over the U.S. long-distance market still yields advantages.

"To this day, AT&T benefits from people who remember the old days," said Ken McGee, a telecommunications analyst with the Gartner Group.

Analysts give much of the credit for AT&T's transformation to Mr. Allen, who took over as chief executive in 1988 and set out to transform a culture that AT&T's own press handouts now describe as "regimented . . . top-down decision-making."

He brought in new talent from outside the Bell system, put a newpriority on customer service and stressed "partnerships" with suppliers and customers.

He says the job isn't over yet, but he's happy with the progress he's made.

"I'd say on a scale of one to 10, we're getting somewhere around 7, and I think we've moved from 5 to 7 in the last couple years. . . . We'll have to move constantly just to stay at 7."

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