Word: belling
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...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...
...plan calls for Ma Bell to be divided into four distinct companies: AT&T Business Services, AT&T Consumer Services, AT&T Broadband and AT&T Wireless. That's a lot of slicing and dicing, but it gets even more complicated. Some of the new companies will start off as "tracking stocks," meaning they're independent in name only. AT&T Business will become the parent of AT&T Consumer. And the whole thing will take two years to happen...
...direction comes at a dark time for Ma Bell. Since its founding in 1885 as the long-distance arm of the American Bell Telephone Co., AT&T has held a privileged position in the U.S. economy. With its control of the nation's phone grid, it was largely insulated from competition. That deprived consumers of choice. ("We don't care," Lily Tomlin's Ernestine the Operator used to explain. "We don't have to. We're the phone company.") It also made the company's stock such a sound investment that it became famous as the stock of choice...
...core businesses have been in an accelerating decline. In 1984 a federal antitrust ruling forced AT&T to spin off its lucrative local phone operations, now the Baby Bells. More recently, stiff competition from WorldCom, Sprint, the Baby Bells and wireless has been driving the profit out of the long-distance business--which still accounts for as much as 65% of AT&T's more than $62 billion in revenue. Ma Bell, which had been charging 15[cents] a minute for calls, suddenly found itself competing with rates as low as 4[cents] a minute. In this year's third...