At&Amp;T's New Operator?

NO ONE WAS confirming the reports. But by the time you read this, C. Michael Armstrong of Hughes Electronics may well have been officially named the next head of AT&T. His appointment would end a tortuous yearlong search for a successor to retiring chairman Robert E. Allen, 59, that has all but paralyzed the company at a critical juncture. All around, rivals are merging, forming strategic alliances and pushing into its turf.

AT&T apparently has been courting Armstrong for months. He was reportedly reluctant to accept for fear that he would at least initially play second fiddle to Allen, who hasn't specified when he'd step down. Even if that issue has been resolved, Armstrong faces a challenging situation. Says Robert Rosenberg of Insight Research Corp. in New Jersey: ""He has to boost morale, which is in the tank. He has to articulate a strategy for the future. And he has to do a deal.'' Mired in its search, AT&T has passed up alliances that would have better positioned it in today's fast-changing world.

If anyone can get AT&T back on track, Armstrong may be the guy. Raised in Detroit, he took a job with IBM after college. He rose quickly, turning around the troubled European division and, by the late '80s, making the short-list to succeed chief executive John Akers. After being passed over, he left in 1991 for Hughes, a money-losing defense and aerospace contractor owned by General Motors. Armstrong wasted little time reconfiguring Hughes as a hugely profitable consumer-electronics and communications company. He cut costs, laid off 25 percent of its workers, sold off unneeded assets and pushed heavily into evolving technologies, where Hughes had a competitive edge. An example: a little satellite-based broadcast system that he built into the hugely profitable DirecTV.

At Hughes, Armstrong emphasized finding out exactly what customers need, now and in the future, and delivering, fast. That mind-set would be helpful at AT&T, where missions are confused and bureaucracy has impeded innovation. In fact, what Armstrong did at Hughes might look so good to AT&T that there's speculation ""Armstrong may come with his whole company under his arm,'' as Rosenberg puts it.

GM has already agreed to sell Hughes's defense operations to Raytheon, and there are reports that it is considering auctioning off the rest, including DirecTV and its flourishing wireless business. Might AT&T bite? With all the mating dances being waltzed around the telecom business these days, anything is possible.

© 1997