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AT&T names new chief
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October 20, 1997: 3:31 p.m. ET
Company posts 3Q earnings of 71 cents a share; plans to sell two units
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NEW YORK (CNNfn) - AT&T Corp. Monday named C. Michael Armstrong to succeed Robert Allen as its chairman and chief executive officer.
The company also announced its third-quarter earnings and said it is selling its Universal Card Services and AT&T Solutions Customer Care units.
Armstrong was elected to the post Sunday by the company's board of directors. He succeeds Robert Allen, who will serve as chairman of the board's executive committee until his retirement in February 1998.
Armstrong, 59, comes to AT&T from Hughes Electronics Corp., which he had headed since 1993. While at Hughes, Armstrong oversaw the launch of the company's DirecTV home satellite-TV business. Prior to joining Hughes, he spent 31 years at IBM Corp.
Armstrong had been considered for the top post a year ago at AT&T but he declined to accept the offer because Allen wanted to remain as chairman for an interim period. AT&T chose R.R. Donnely & Sons Co Inc. chief John Walter instead. Walter quit eight months later.
Armstrong said he left Hughes for what he called a "fantastic opportunity" at AT&T. "It is a chance in the lifetime to make a significant contribution to what is and will be the global leader in the communications industry." (364K WAV) or (364K AIFF)
The company also said that John D. Zeglis, 50, was elected president and a member of the board of directors.
"With this decision, the AT&T board believes that we have ensured the company's continuing leadership in this dynamic industry well into the next century," said Walter Elisha, a member of the board's executive search committee and chairman and chief executive officer of Springs Industries.
"We believe Mike is the right choice to lead AT&T in capitalizing on the unprecedented growth opportunities in the supercharged communications industry," he said.
AT&T also announced third-quarter earnings of $1.15 billion, or 71 cents a share, down from $1.35 billion, or 84 cents a share, a year ago. Those numbers handily beat Wall Street's estimates of 65 cents.
Revenue rose more than 1 percent to $13.3 billion because of increases in wireless services, business long distance and growth initiatives. However, the company said the increases were partially offset by a decline in consumer long-distance revenue, which it attributed to the increased use of free calling associated with ongoing promotions.
"AT&T is executing on the critical priorities we set for our businesses. We're on track and focused on investing in the future while driving costs out of our core business. The low-water mark in our results is behind us and we're on the right trajectory to future success," Allen said.
The company also said it has retained Smith Barney to serve as the advisor on its sale of AT&T Universal Card Services and BT Wolfensohn as advisor for the sale of AT&T Solutions Customer Care.
Dan Somers, AT&T's senior executive vice president and chief financial officer, said both businesses are doing well financially. He said the decision to sell them is part of AT&T's efforts to retain only businesses central to its communications services strategy.
"This move positions both units for further growth as part of companies that are strategically focused on credit card and customer service markets. At the same time, it enables AT&T to redeploy its assets into more strategic opportunities while maintaining access to the units' capabilities as a customer and partner," he said.
--Cyrus Afzali
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AT&T
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