The man who led AT&T through almost a decade of turmoil from 1988-97 isn't mourning its apparently imminent disappearance. What Robert Allen does...
BOYNTON BEACH, FLA. — The man who led AT&T through almost a decade of turmoil from 1988-97 isn’t mourning its apparently imminent disappearance.
What Robert Allen does regret is something other chief executives have struggled with recently — a failure of succession planning.
Two weeks after AT&T agreed to be purchased by SBC, Allen sat for an extended interview for the first time since he retired.
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“The things I did well, or things I did badly, I always did them with integrity,” he said. “People at AT&T now, they value that. I feel good about that, particularly looking at the brands we were trying to compete with. We were trying to compete with MCI, which kept a completely different set of books.”
Allen, now 70, led the company through seismic changes and remains a contentious figure. One USA Today article described him as “a likable, laconic but steely midwesterner. He gets high marks for integrity. He’s Jimmy Stewart in a corner office.”
Another called him one of the six worst tech CEOs ever.
A takeover by SBC “is probably the best thing that could happen to AT&T,” he said. “It’s not going to end the challenges for either company — there has to be more consolidation in the industry.
“I don’t cry tears over the demise of the Bell System, but there were an awful lot of good things about it,” he said. “It’s just one of those transitions.”
Allen’s big regret is not having a successor ready before he retired.
“I made several attempts at it; it really didn’t work,” he said.
An outsider he groomed as his successor, Alex Mandl, left for a startup. One internal candidate, John Zeglis, wasn’t ready to lead the company when Allen was ready to retire, Allen said. Another, Randy Tobias, “didn’t make it, then he went off to Lilly. It was a real disappointment.”
Allen’s eventual successor was C. Michael Armstrong, who became CEO in October 1997. Armstrong loaded the company with more than $56 billion in debt as he spent about $110 billion for cable companies that were eventually sold to Comcast for roughly $54 billion. Armstrong left AT&T to become Comcast’s chairman.
“It’s not enough to have a strategy,” Allen said. “You have to execute it. That’s where AT&T’s grasp for another life fell by the wayside.”
The cable assets the company bought “weren’t vetted properly,” Allen said.
Armstrong also spun off the wireless business, which had been built from Allen’s purchase of McCaw Cellular Communications. In a deal that closed in October, Cingular Wireless, a joint venture of BellSouth and SBC, bought the company for $41 billion.
“I’ve never second-guessed my successors, but it seemed to me the wireless business was an integral part of consumer services,” Allen said.
As for current CEO David Dorman, Allen said, “He’s done a good job of trying to weave through some tough battlefields and get some good value for AT&T shareholders. Good strategist, not an operating guy. Very articulate, enthusiastic, good execution.”
Talking about his own successes and failures, Allen’s other big regret is the $7 billion NCR merger, a failed attempt to get into the computer business that cost AT&T billions in additional losses before it was spun off.
“The deal was praised at the time for being the smart thing to do because of the convergence of technology and communication,” he said. “We didn’t manage it well. If we’d have had any sense, we would have put a new leader there. We were too Bell Systemlike, trying to put it through without ruffling any feathers.”
The hardest thing he had to do, Allen said, were the layoffs.
“We were in just a constant state of downsizing,” he said. “It became apparent in almost every quarter that we could not afford to carry the costs we had over the years as a monopoly.”