AT&T hires new president in strategy shift

It plans to focus more on network products

December 03, 2003|By Jon Van | Jon Van,CHICAGO TRIBUNE

CHICAGO - In a surprise move intended to reposition itself competitively, AT&T Corp. said yesterday that it had replaced its president after about a year on the job.

The telecommunications company said Betsy J. Bernard, 48, will be succeeded by William J. Hannigan, 44, chief of Sabre Holdings Corp., which operates the Travelocity Web site.

Bernard and Hannigan have extensive telecommuncations experience. Hannigan was chosen for the AT&T post because of his success in executing Sabre's information technology strategy, said David W. Dorman, AT&T's chairman and chief executive officer.

The telecommunications industry has been hit hard by the economic slump, and some of the biggest revenue declines have been in the long-distance voice business. To cope with hard times, Bernard's job was primarily to cut costs and move AT&T into local voice service.

Dorman said he is seeking to reposition AT&T's business and that Hannigan will help move AT&T from providing business customers with data connections to supplying them with more sophisticated network products such as data storage and security.

By managing network infrastructures for large enterprises, AT&T would position itself to compete with companies such as IBM Corp. and Electronic Data Systems Corp. in helping clients integrate data networks.

Dorman said Hannigan's skills "will help AT&T deliver on its enormous potential as the world's networking company."

Although it has been losing business customers, AT&T continues to be the leading supplier of network connections to large and medium-sized enterprises, and it has been working quietly to move more into information technology management, said Pascal Aguirre, a senior vice-president at Adventis, a Boston telecommunications consultant.

The idea is to move into the more lucrative role of sorting out complex information technology issues for customers, but AT&T doesn't aspire to become another IBM, he said.

"Under Dave Dorman, AT&T has quietly been transforming its business," said Aguirre. "AT&T's end game isn't to look like IBM Global Services, but rather it wants to dominate the middle ground where IT infrastructure and telecom infrastructure meet."

As the traditional connections that AT&T supplies have become common commodities, profit margins have shrunk, and the company has to provide higher-value services to customers to thrive, Aguirre said.

AT&T is probably in the best position of any phone company to succeed, he said.

Once businesses begin to recover from the economic downturn and spend more, they will probably invest in networked services to bolster productivity, said Robert Rosenberg, president of Insight Research Corp., a telecommunications research company in Boonton, N.J. That means using networked services more extensively, he said.

"If American businesses are going to put their back office applications into a networked environment, it has to be highly secure," said Rosenberg. "AT&T has the expertise to supply the most secure networks."

AT&T's share price fell 8 cents to $20.27 yesterday.

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