Apparent next CEO, Mandl leaves AT&T Colleagues are stunned

millions await at start-up

August 20, 1996|By NEW YORK TIMES NEWS SERVICE

In a move that stunned his colleagues and sent AT&T's stock tumbling, Alex J. Mandl resigned yesterday as the No. 2 executive of the giant long-distance carrier to run a tiny start-up company.

Mandl -- the president of AT&T who was widely seen as the heir to Chairman and Chief Executive Robert Allen -- said he is leaving to become the chairman of Associated Communications, company that owns licenses to offer a variety of wireless telephone and data services.

The 52-year-old, Austrian-born executive said his new job is "an opportunity to start something from the ground up and participate in a big way as an equity player."

In an astonishingly rich package, Mandl is said to be getting a $20 million signing bonus, plus an 18 percent equity stake, which might be worth more than $35 million.

While there were signs that Mandl's star might have been dimming, his departure is another rude shock in what has been a turbulent year for AT&T.

Since Allen announced in September that he would split the telecommunications giant into three companies, the company has endured an avalanche of criticism for laying off 40,000

employees. And last month AT&T alarmed Wall Street by disclosing that its bread-and-butter long-distance business is eroding.

Now AT&T is losing one of its most prominent managers. The company did not announce a replacement for Mandl, and Allen said he will look outside AT&T and even the telecommunications industry for a new president.

During the interim, at least, the company will be run by Allen and two other executives in his office -- Richard Miller, chief financial officer, and John Zeglis, senior executive vice president.

That Mandl would trade a shot at AT&T's top job for an obscure wireless venture is a sign to some of how much deregulation has changed the world of telecommunications -- and AT&T's once lofty place within it. "If you look at their recent results, you have towonder who's at the helm," said Berge Ayvazian, executive vice president of the Yankee Group, a communications research firm in Boston. "They haven't done anything they said they were going to do."

Mandl was recruited by Allen in 1991 and promoted to ever bigger jobs. But analysts and AT&T executives said his status had waned since the "trivestiture" was announced. While Allen named Mandl president of the core telephone company, he did not anoint him as his successor -- a slight noticed by AT&T insiders.

Allen, who is 61 and has said he does not plan to retire before turning 65, put Mandl in charge of repositioning AT&T as a stand-alone phone company after it spun off its equipment-making and computer arms. But after AT&T became bogged down by weak financial results, analysts said Mandl had lost some authority.

Allen said he was satisfied with Mandl's performance. But he noted that he did not try to retain Mandl when they first talked a month ago about Mandl's leaving.

AT&T's shares fell $1.375 yesterday, to $54.175.

Pub Date: 8/20/96

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