158 lines
7.6 KiB
Plaintext
158 lines
7.6 KiB
Plaintext
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# <Tolmes News Service> #
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# ''''''''''''''''''''' #
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# > Written by Dr. Hugo P. Tolmes < #
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#######################################
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Issue Number: 20
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Release Date: January 20, 1988
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Welcome to Tolmes News Service Issue #20. 20 Issues and still going strong!!!
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This issue will be mostly about AT&T's attempts at a comeback.
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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1-900s:
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I've seen too many advertisements for 1-900 services. When will these people
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stop?? Every day there is a new service at a 1-900 number. I've also seen many
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news reports on kids who run up $800 phone bills by using these services all
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day long. They MUST be making big bucks.
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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TITLE: AT&T: The Making of a Comeback
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FROM: Business Week
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DATE: January 18, 1988
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The time was Labor Day, 1986, and the situation was grim. In the 33
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months since a federal antitrust suit had forced American Telephone and
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Telegraph Co. to divest itself of three-quarters of its $150 billion in
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assets, the company that arguably had been the most consistently profitable,
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the most self-assured, and one of the best-managed corporations in the 20th
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century had performed one belly-flop after another. Although AT&T's leaders
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were trying to cut costs, expenses were still out of control The company's
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computer business, one of the new ventures that was supposed to take up the
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slack after AT&T spun off its profitable local phone companies, was losing
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nearly $1 billion a year. Thousands of employees were being laid off or
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shunted about like pawns, destroying AT&T's fabled esprit.
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It was in this strained atmosphere that the company's new chairman, James
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E. Olson, gathered his 27 top executives at a Cape Cod golf resort called
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New Seabury. Olson brought with him a broad plan: He wanted to protect and
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improve AT&T's core businesses of long-distance service and phone equipment,
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get its computer business into the black, and increase the 9% share of AT&T's
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$34 billion in revenues that came from oberseas. But each strategy involved
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cooperation- and tradeoffs - of a sort these executives seldom had to make
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while running fiefdoms in the old Bell System.
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For five days, AT&T's leaders fought turf like congressmen arguing over
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budget cuts. How should they cut costs? What businesses should be in? Should it
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always rely on AT&T Bell Laboratories to design new products, or buy some from
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outside? Breaking only once for golf- considerable self-restraint for a
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15-handicapper like Olson - they finally settled their differences,
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forging compromises for the common good. "Sure, some guys were trying to
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protect their businesses," recalls oneas a bigger
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feeling- that we had to do this now becuase we weren't going to get another
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chance."
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To secure the commitments he'd won, Olson asked for an expression of
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loyalty. As chief operating officer, he had failed two years earlier to
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impliment a more modest plan, because "I hadn't gotten my managers to buy
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into it." This time, as chairman, "I wanted buy-in." One by one, Olson
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invited each man to stand. "Are you with me?" he asked. "Yes, Jim, I'm
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with you," came the inevitable reply. "It was pretty dramatic," recalls
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Frank Blout, president of AT&T's Network Operations Group. "A powerful
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moment...a catharsis."
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From the perspective of 16 months later, New Seabury was AT&T's Normandy.
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It's still far from the organization it aspires to be: Last November, seeking
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lessons in management they soon plan to apply, Olson and seven key AT&T
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executives went to Dearborn, Mich., where a team of Ford Motor Co. executives
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described the approach they'd used to develop Ford's popular new Taurus
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automobile. But the battle at New Seabury was the breakthrough AT&T needed.
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RESILENT. Already, the company has made big gains. It is now spending $6
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billion on new equipment to beef up its $18 billion long-distance business. It
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has consolidated numerous back-office operations, cutting overall costs by
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$1 billion, or 3% a year. It has restructured its computer operations,
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slashing losses by 70%. And it is trying to become a global player again in
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phone equipment, a role it gave up in the early 1920s.
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In 1987 these belated improvements pushed net income up nearly 50%, to $2
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billion or $1.90 a share, well above analysts' estimates of a year ago. If
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AT&T can cut costs more, raise its nonphone revenues, and persuade the Federal
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Communications Commission to follow up on a proposal for less stringent
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regulation of long-distance rates, earnings could exceed $2 a share in 1988.
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AT&T's stock is trading closer to the low 30s than los 20s of a year ago.
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During October's market crash, in fact, AT&T proved to be among the most
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resilient of blue-chip stocks, losing about 14% of its value vs. 24% for all
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Big Board issues.
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If the tale stopped there, it would be just one among countless
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comeback stories of the past decade. But it's more than that. Just as in the
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early 1980s the No. 1 issue for U.S. business was restructuring to be more
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competitive, a primary issue of the late 80s is whether the huge companies
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that once symbolized American industry's worldwide preeminence will recover
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from recent setbacks. Can $100 billion General Motors, $55 billion IBM, and
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$34 billion AT&T solve their yawning product development and marketing
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problems? Or are they simply too unwieldly to be managed well in an
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industrial economy in which markets and technologies change by the month? The
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insights that Olson's efforts afford on these issues are the real story, as he
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tries to complete AT&T's turnaround.
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STAGNATING. When the 62-year-old chairman convened the meeting at New
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Seabury, his company was in shock. Until the breakup, AT&T had been the
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largest privatn the U.S. It had run the best phone system in the
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world. It was a place where loyalty was rewarded as well as demanded, where a
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former supervisor of operations could rise to the top job if he was willing
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to transfer often- and stick around for 43 years.
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Though AT&T was still invincible in its core businesses, by September,
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1986, much was going wrong. The breakup had required AT&T to hand over its
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Bell-shaped logo to the regional phone companies. Now, adding injury to insult,
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the Baby Bells' earnings and stock prices were rising much faster than AT&T's.
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It had planned to challenge International Business Machines Corp.: What
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were its electronic phone switches, after all, but computers? But AT&T was
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barely showing up in computer market-share statistics- and only because it
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had purchased 25% of Italy's Olivettti. In the previous two years the company
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had lost over $750 million on sales of electronic components and PBX switches
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used in corporate phone systems.
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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Well you get the picture. This issue will end right here.
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Next Issue:
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- AT&T and Sun MicroSystems
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- AT&T CC Fraud
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