Word: armstrongs
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Dates: during 2000-2000
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...brass tried to keep things upbeat at last week's press conference--called to announce that one of America's oldest and most revered institutions was splitting into four companies. AT&T CEO Michael Armstrong told a roomful of reporters that his own aunt could still sleep easily putting her money in Ma Bell and living off the dividends. Lower-level Bellheads even joked about the career opportunities the split would create. "You always wanted to run your own company," one quipped to another. "Now you're going to get the chance...
...Wall Street wasn't smiling at this cheerful admission that Armstrong's strategy to turn Ma Bell into a vertically integrated communications giant had failed utterly. After last Wednesday's announcement, AT&T stock plunged 13%, to its lowest level in a decade. And it tumbled 5.5% more by week's end. David Lefkowitz, an analyst at Credit Suisse Asset Management, had some different advice for Armstrong's aunt, saying that AT&T stock is "probably dead money for some time." Salomon Smith Barney analyst Jack Grubman downgraded the stock for the second time in two weeks and declared...
...breakup is AT&T's conviction that at current valuations the parts are worth more than the whole. The official line is that the smaller, nimbler companies will be more profitable independently. "With their own resources and asset-based stock they can shape their own destiny and future," says Armstrong. But the plan also reflects AT&T's frustration that investors have been so focused on its evaporating long-distance business. The split is designed to force Wall Street to pay more attention to faster-growing parts of the company...
...three years at the helm, Armstrong, 62, has tried to shift AT&T into new and more lucrative areas. He moved aggressively into cable, plunking down $115 billion to build the nation's biggest cable network. Armstrong has also pushed into fast-growing areas like wireless and has tried to turn AT&T's WorldNet into a rival of AOL's. The ultimate vision was that Ma Bell would clean up by cross-selling its 80 million customers a bundle of telephone, cable and Internet services...
Critics see the breakup as a capitulation to investor pressure to get the stock price up at any cost. Armstrong tried gamely last week to present it as consistent with his previous efforts. "Structure serves strategy, and at least in my view, our strategy has been consistent," he said. But not everyone was buying it. "AT&T made a big deal about creating an integrated communications company selling bundled services," says Salomon Smith Barney's Grubman. "That is being abandoned after less than two years of trying...