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Ex-AT&T CEO not sad to see giant's end

BOYNTON BEACH - The man who led AT&T Corp. through almost a decade of turmoil from 1988 to 1997 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 bought by SBC Communications Inc., Allen sat for an extended interview for the first time since he retired.

"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.

He's credited with spinning off Lucent Technologies Inc. and jump-starting AT&T's wireless business by buying McCaw Cellular Inc.

But he's criticized for AT&T's $7.4-billion acquisition of NCR Corp., a failed attempt to get into the computer business that cost AT&T billions in losses before it was spun off. And he made the cover of Newsweek with the headline "Corporate Killers" after his 1996 announcement that the company would cut 40,000 jobs.

Married for 47 years, Allen and his wife, Betty, have five children and 10 grandchildren. They split their time between a large but not lavish home in Boynton Beach and a house in Short Hills, N.J. He golfs and gardens. Although he has two artificial hips and arthritis in his back, Allen's health is generally good, his memory sharp.

In the hourlong interview, Allen spoke about everything from his start in 1957 at Indiana Bell, where he spent months learning to use different switchboards, to his successors' strategies.

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. "I don't have a lot of sorrow over the current state or the future state of AT&T. 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. "It's one of the most important tasks a board and a CEO have, to prepare a successor. It's not that we didn't work at it, but what we worked at didn't work."

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 to buy cable companies that were eventually sold to Comcast Corp. for roughly $54-billion in stock and assumed debt.

Armstrong left AT&T to become Comcast's chairman.

Armstrong also spun off the wireless business, which had been built from Allen's purchase of McCaw Cellular. In a deal that closed in October, Cingular Wireless LLC, a joint venture of BellSouth Corp. 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 successes and failures, Allen's other big regret, besides succession planning, is the NCR merger.

"It was a $7-billion acquisition," he said. "It's a lot of money, a big investment. But for AT&T, it was pretty small."

"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 System-like, trying to put it through without ruffling any feathers. Of all the things I'd like to do over, I'd like to do that one over, but it was a relatively small thing for AT&T."

His proudest achievements include traveling to plants and call centers around the country to talk to workers after the company's 1984 court-ordered break up, then synthesizing what they said into a values system the company could embrace instead of being "Ma Bell," the nation's only telecom choice.

The credo, called "Our Common Bond" gave workers back their sense of mission, Allen said. He also worked on breaking "slow monopolistic thinking" to make employees and the company more competitive.

AT&T remains a part of his daily life. The letters "att" are part of his e-mail address and AT&T is his long-distance company. "Most days are a lot of fun. I'm glad to be retired, particularly with our industry as crazy as it is these days."

[Last modified February 21, 2005, 05:13:13]