views updated


founded: 1899 variant name: american telephone and telegraph corporation

Contact Information:

headquarters: 32 avenue of the americas
new york, ny 10013-2412 phone: (212)387-5400 fax: (908)221-2528 toll free: (800)348-8288 email: [email protected] url:


AT&T is a communications company offering long-distance telephone service, voice, data and video communications, cable television and Internet communications services. In 1996 the company divided itself into three separate operations: AT&T Corp. (telecommunications), NCR Corporation (computers), and Lucent Technologies Inc. (network products). The two latter divisions were then sold. With increased long-distance competition during the 1990s, AT&T was forced to focus on retaining its market share in that core business area.

In 2000 the company restructured and created a family of four new companies: AT&T Wireless, AT&T Broadband, AT&T Business and AT&T Consumer. The following year, each of the separate companies began trading as public stock and tracking stock, and AT&T Wireless completed its spin-off, and became an entirely separate entity.

Other services offered by AT&T Corporation include WorldNet, an Internet-access provider; local phone services; and the AT&T Universal Card, a credit card. The company also provides cable television and wireless phone service in more than 100 cities in the United States. DIRECTTV, a television satellite system, is among the newest of AT&T's innovations.


As reported by the company, AT&T's total 2001 revenues were $52.6 billion, a decrease of 5.4 percent from 2000 revenues of $55.5 billion. However, the AT&T Wireless spin-off and separation accounted for some of the revenues decrease. Of 2001 revenues, $28 billion was generated by the company's business markets division; $15.1 billion was generated by its consumer markets division; and $9.8 billion was generated by AT&T broadband services.

AT&T Wireless, whose sales after July 2001, were not included in AT&T's revenues, were $12.5 billion in 2001, a 25-percent increase over 2000 revenues of $9.4 billion. AT&T stock was valued at around $15.88 per share in early 2002. The company's 52-week high was $23.75, and its 52-week low was $14.18 per share. The company's earnings per share (EPS) in 2001 were -$1.36.


Analysts tend to view long-distance service as a mature market in the United States, as well as a market characterized by increasing competition due to more cost-focused consumers. Some experts say AT&T's lack of swift reaction to this change accounted for some of the company's problems. For example, while companies such as Sprint offered flat rates for long-distance service early on, AT&T remained at the high end of the price scale. Eventually, the company offered a $.15-per-minute flat rate to compete with the lower prices of smaller companies. AT&T was also struck hard in 1996 by companies that purchased long-distance service in bulk and then resold to consumers and businesses at less expensive rates.

AT&T admitted to being caught off-guard by smaller companies offering fierce competition. This oversight caused AT&T's long-distance services to underperform. Analysts had expected AT&T CEO C. Michael Armstrong, who was named chairman in 1997, to help the struggling corporation recover. In late 2001, analysts questioned whether the remaining three AT&T companies would flourish after the complete spin-off of AT&T Wireless, the fastest-growing of the four AT&T companies. By 2002, it was apparent AT&T had still been slow to react to an increasingly more tech-savvy consumer.

Perhaps most vulnerable was the broadband company. In July 2001, Comcast Corp. made a $55 billion bid for AT&T's cable company. By December, the two companies had worked out a merger, which valued AT&T Broadband at $72 billion. The merger formed a new company, AT&T Comcast Corporation.

A continuing threat to AT&T is the rise of the Internet, offering fax capabilities, phone calls, live radio programs, and video conferencing—areas in which AT&T hoped to provide services. Many analysts view AT&T's launch of WorldNet as a successful answer to the challenge posed by the Internet in these areas. In fact, analysts say fewer than 50,000 people currently make phone calls using the Internet, giving telecommunications companies like AT&T an edge in the market.

A technological advantage that some analysts believe may be beneficial to the company was AT&T's plan to implement "Project Angel." The project would give customers the option to choose their local telephone provider, which may be attractive enough to successfully launch such a program. Once in place, this technology could also offer consumers the capability to hook computers up at high speeds for minimal costs. Some analysts believed this technology was AT&T's competitive edge, although many kinks have not yet been ironed out.

FAST FACTS: About AT&T Corporation

Ownership: AT&T is a publicly owned company traded on the New York Stock Exchange as well as the Boston, Midwest, Pacific, and Philadelphia Exchanges in the United States. AT&T stock is also traded in Brussels, Geneva, London, and Paris.

Ticker symbol: T

Officers: C. Michael Armstrong, Chmn. and CEO, 62, $3,275,891; David W. Dorman, Pres., 46; Charles H. Noski, VChmn. and CEO, 48, $1,555,031; John D. Zeglis, Chmn. AT&T Wireless, 53, $3,098,976

Employees: 166,000

Principal Subsidiary Companies: The company's subsidiaries include WorldNet, AT&T Digital PCS, AT&T Broadband, AT&T Wireless, AT&T Business, and AT&T Consumer.

Chief Competitors: As a major telecommunications provider, AT&T's chief competitors include Ameritech, Bell Atlantic, BellSouth, Cable & Wireless, GTE, and MCI. Competitors in related industries in which AT&T also participates include AirTouch, America Online, IBM, NETCOM, PSINet, and WorldCom.

From 1988 to 1996, analysts criticized CEO Robert Allen's strategies. During his years of service, the company spent $20 billion on purchases of businesses and $19 billion in redesign efforts. Since January of 1996, AT&T's stock has dropped 20 percent. Despite all of this, many analysts at the time agreed that AT&T remained financially strong. AT&T was the number one performing stock on the Dow-Jones index for the third quarter of the 1997 fiscal year. The company brought in more than $8.0 billion in annual cash flow. Its assets totaled $56.0 billion and outstanding debt totaled $8.5 billion. Today, many view AT&T's financial standing, coupled with its strong name-recognition, as its strongest asset for competitive survival.

Armstrong was also criticized for slow-moving initiatives. According to Business Week, the Telecom Act of 1996 laid the groundwork for the Baby Bells to get into long distance, which doomed AT&T. Armstrong cut prices and costs in AT&T's long-distance business, and then pumped $100 billion into the broadband arm of AT&T. Critics claimed he moved too slowly, and when the time the long distance business had collapsed, the local phone and Internet initiatives were not yet fully developed. AT&T had already lost customers and faced dissatisfied shareholders.


Alexander Graham Bell's invention of the telephone in 1876 led to the development of Bell Telephone (1877) and England Telephone (1878), which were later combined to create National Bell Telephone in 1879. After fighting off competitor patents from others, such as Western Union, in 1882 National Bell acquired Western Electric, the leading electrical equipment manufacturer in the United States at the time. After Bell's telephone patent expired in the 1890s, competing phone companies emerged. The company changed its name to American Telephone & Telegraph (AT&T) and moved from Boston to New York in 1899.

As a result of the company's acquisition of Western Union in 1909, AT&T controlled two markets: communications and electrical equipment manufacturing. Under President Woodrow Wilson, AT&T was forced to sell Western Union and refrain from purchasing other independent phone companies without approval. AT&T was also forced to provide access to its networks to other companies. In other words, the government was forcing AT&T to give up its standing as a monopoly (when one supplier controls one-third of a local or national market) This allowed competitors, such as MCI, to obtain access to AT&T's networks, which created instant long-distance competition.

A lawsuit initiated by the government caused AT&T to sell seven Bell companies in 1984. AT&T was allowed to keep its long-distance services and Western Electric. Many jobs were cut in order for AT&T Corp. to remain competitive in such a rapidly growing industry. AT&T bought the electronic mail service division of Western Union in 1990. AT&T Corp. ranked seventh in the world's computer makers after it bought Teradata and NCR in 1991 (sold along with Lucent in 1996); the company also bought McCaw Cellular in 1995.


AT&T was organized into divisions and businesses addressing its specific markets. These divisions were: the Consumer Markets Division (CMD), Business Markets Division (BMD), AT&T Solutions (professional services), AT&T Wireless Service, AT&T Local Services Division, and AT&T Universal Card Services (UCS). These are bolstered by two other organizations—Network and Computing Services and AT&T Labs—that provide the company's divisions and businesses with a competitive advantage in serving their customers.

As a result of AT&T's declining core business—long-distance service—the company revised its corporate strategy for the 1990s. AT&T's new focus was geared toward communications solutions for large and small customers. Included among these solutions were long-distance, wireless, satellite TV, and credit card services. Local calling services emerged as well, along with a push to expand digital wireless networks.

An emphasis on international growth and outsourcing arose during the late 1990s as well. Refining their strategy in 1997, the AT&T Board of Directors announced its intent to sell two of the company's profitable but non-strategic businesses: AT&T Universal Card Services and the Customer Care unit (formerly known as American Transtech) of AT&T Solutions. Another part of the company's new strategy was its plan to cut costs by eliminating up to 17,000 positions by the year 1999.


AT&T's primary source of revenue was from its long-distance service. An industry leader, the company ventured into other business areas including computers, wireless services, credit cards, and satellite TV. However, an unfortunate combination of increased competition and AT&T's disregard for smaller telephone companies caused AT&T's long-distance service to suffer.

AT&T's venture into the computer industry in the 1980s failed. Purchasing NCR Corporation, AT&T hoped to breathe life back into its computer operations. After the company suffered losses totaling $10.1 billion, including several startup companies in the wireless and software sector, which were stifled shortly after their unveiling, AT&T decided to sell NCR. Even the company's Universal Card began to suffer due to enormous default rates. AT&T was forced to sell NCR and Lucent Technologies in order to focus on long-distance service and its increasing competition; therefore, AT&T Corp. was the only remaining segment of the previous three AT&T divisions.

Due to increasing cost-consciousness on the part of long-distance customers, new strategies were essential for AT&T to remain competitive. Operating at the high end of the pricing scale in this market was no longer a practical move for AT&T, a company struggling to maintain its position as the long-distance leader of the nation. AT&T's challenge was to maintain market share while growing new services like WorldNet, the Internet access service launched in the late 1990s.


WorldNet was one service among many in AT&T's latest strategy called "bundling," according to Catherine Arnst in Business Week. The company placed high expectations on its recognizable name to sell "bundles" or packages of products including local and long-distance calling, wireless service, and Internet access. AT&T's goal was to become a convenient one-stop communications services company. Since 1994, the company has been implementing this strategy by acquiring companies like McCaw Cellular. AT&T also seized opportunities in video with its 2.5 percent interest in Hughes Electronics Corp.'s DirectTV, a satellite service being marketed to AT&T customers. AT&T's WorldNet service also ranked as the second largest Internet-access server.

While in 2002, the Internet and wireless communications were still considered new markets, they were expected to have a tremendous impact on trends within the communications industry. In 2002, AT&T launched its "M-Life" wireless messaging features. Although wireless messaging in 2001 was not widely used, with about 2 percent of Americans owning devices that can access mobile data, it was predicted that by 2007, 59 percent would own such devices.

CHRONOLOGY: Key Dates for AT&T Corporation


Founded as American Telephone & Telegraph


Acquires Western Union


AT&T agrees to the Kingsbury Commitment in which it will 1) buy no more independent phone companies without government approval; 2) sell Western Union; and 3) allow independent phone companies to use its networks


Bell Labs is formed


The Justice Department sues AT&T to try to force them to sell Western Electric


A settlement in the Justice Dept. case allows AT&T to keep Western Electric but forbids them to enter any other unregulated markets


FCC takes away AT&T's telephone equipment monopoly


Allows other companies such as MCI to connect to their phone network


The U.S. government forces AT&T to sell seven Bell companies


Buys the electronic mail service division of Western Union


Acquires Teradata and NCR Corp.


Purchases McCaw Cellular


Company is divided into three separate operations: AT&T Corp., NCR Corporation, and Lucent Technologies


Forms a partnership with Bell Atlantic Corp. and Nynex Corp. to provide customers with lower rates


Acquires Teleport Communications Group (TGG), the largest alternate provider of local telecommunications service in the United States


Completes a 3-for-2 stock split, issuing one additional share of common stock for each two shares owned


Announces restructuring plan to create a famiily of four new AT&T companies: AT&T Wireless, AT&T Broadband, AT&T Business and AT&T Comsumer; each would be independent, publicly-held and traded businisses


Closes a $10-billion global bond offering, the second largest issuance by an American Corporation


Announces an agreement to merge with Comcast in a $72-billion transaction to be completed by the end of 2002


AT&T runs the world's largest communications network and is the leading provider of long-distance and wireless services. The company also offers online services and cable television and, in the late 1990s, it began to deliver local telephone service.

"Project Angel" was among AT&T's newer developments in the late 1990s. More a "technology" than a product, the company introduced its plans for this new service in the mid-1990s. AT&T planned to use radio technology to deliver local telephone service and high-velocity Internet access without requiring a new wire to be connected to the customer's house. An 18-inch square box was designed to attach to the side of a house or small business, the box would be connected to the existing wire. When a call is made, a signal inside the box triggers an antenna nearby, which connects to AT&T's network. The intended result was wireless communication for local calling, an increasingly popular market as local telephone markets have been allowing customers choices in local service providers.


In 2000, AT&T donated more than $52 million and more than $20 milllion in products and services to nonprofit organizations in 10 countries. Through the AT&T Foundation, AT&T awards grants to benefit programs in Education, Arts and Culture, and Civic and Community Service. In the area of education, AT&T has traditionally invested in pre-college and higher education programs with emphasis on math and science, both of which are important to the company's business. They place increasing importance on the use of technology and its role in the enhancement of teaching and learning. In late 1995, AT&T announced a five-year commitment totaling $150 million for its new program, the AT&T Learning Network. Designed to get the nation's schools onto the "Information Superhighway," the program represents AT&T's largest commitment to education thus far.

In 2000 AT&T gave $250,000 to each of the five universities participating in the AT&T Education Alliance. The grants were used to develop programs to meet future workforce requirements in the information technology industry.

AT&T also promotes arts and culture around the world by supporting arts programs. The company supports such initiatives by bringing artists and innovative work together with wide audiences. The Arts & Culture program awards between 150 and 200 grants every year. AT&T's efforts in the area of community service are directed toward enhancing life in the communities in which AT&T employees and customers live and work. The company does this by developing programs that address the needs of specific communities through communications and information technology and by encouraging employees to participate in public service.


AT&T provides long-distance service to every country and territory in the world and direct-dial service is available to more than 270 countries. International growth is of increasing importance to AT&T. Current growth areas include China, where a China-United States cable network was slated for completion in 1998. China Telecom and AT&T are among the 10 carriers who signed agreements to construct the first fiber optic under-sea telecommunications cable linking the two countries. With technology able to transmit voice, data, and images at eight times today's established capability, more than 1 million calls could be placed at the same time.

A similar undersea cable was planned to connect the United States and the United Kingdom, providing complete service by 1998. And yet another was developed to connect the United States, Germany, and the United Kingdom by 1998.

AT&T Corporation provides products and services worldwide. However, most of the company's sales are generated in the United States—90 percent of AT&T's total sales. International sales accounted for the remaining 10 percent. In 1997 AT&T announced plans to invest up to $9 billion in order to expand its network to new markets, including local phone and Internet services.


AT&T bills itself as a "demanding and dynamic organization that requires a commitment to community, environment, people, and most importantly, Our Common Bond." The company seeks people who thrive on challenges, are self-confident, and seek immediate responsibility. It also values previous exposure to international or multicultural environments.

AT&T offers competitive benefits that can be tailored to the needs of individual employees. The company also has a comprehensive corporate education program, providing in-house training courses to help employees improve technical and managerial skills. It also offers tuition reimbursement for those wishing to pursue advanced degrees. AT&T adheres to its policy of equal opportunity for employees, placing value on diversity.



arnst, catherine, and amy barrett. "at&t?" business week, 10 march 1997.

arnst, catherine, and peter coy. "at&t: will the bad news ever end?" business week, 7 october 1996.

"at&t building the network of the future today." prnewswire, 17 march 1997.

"at&t corp." hoover's online. 30 june 2001. available at

"at&t to build first china-u.s. undersea cable." business wire, 30 march 1997.

"at&t to build world's most powerful undersea network." business wire, 24 march 1997.

coy, peter. "can at&t keep learning to love the net?" business week, 7 october 1996.

elstrom, peter. "how the turnaround ceo failed to deliver." business week, 23 july 2001.

fillion, roger. "at&t, baby bells offer plan to cut phone rates." reuters, 4 april 1997.

nee, eric. "10 tech trends to bet on." fortune, 19 march 2001.

ziegler, bart. "at&t cut allen's bonus in '96 due to company's performance." the wall street journal, 2 april 1997.

For an annual report:

on the internet at: telephone: (800)972-0784 or write: at&t investor relations, rm. 3349a2, 295 n. maple ave., basking ridge, nj 07920

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. at&t's primary sics are:

4813 telephone communications, except radio telephone

4841 cable and other pay television services

7389 services-business services, nec

also investigate companies by their north american industrial classification system codes, also known as naics codes. at&t's primary naics codes are:

334111 electronic computer manufacturing

334210 telephone apparatus manufacturing

513220 cable and other program distribution

513310 wired telecommunications carriers

522298 all other non-depository credit intermediation

522320 financial transactions processing, reserve, and clearing house activities