Bob Allen, AT&T


Like many AT&T (NYSE: T) executives who cut their management teeth in the Bell System era, Bob Allen rose to the top post after climbing his way up the corporate ladder, beginning at the former Indiana Bell in 1957.

Bob Allen, AT&T

Allen, left, next to Craig McGraw, right (Image source: AT&T Archives)

In 1986, Allen took over the reins from Charles Brown, the executive credited with breaking up the AT&T and the former Bell System, who retired that year.

For Allen, the problem wasn't a lack of vision, but timing.

Off the bat, Allen had two challenges on his hands. First, he had to deal with competition in long-distance voice, particularly from MCI and Sprint, which was eating into its share of the $50 billion market. As of the end of 1988, AT&T's share in the long-distance market stood at 68 percent.

Second, ongoing losses and the fact that both MCI and Sprint had networks that were already based on digital technology, meant Allen had to take a $6.7 billion charge to update AT&T's then-analog telephone network and cut 16,000 jobs.

Because of these issues, AT&T reported its first-ever yearly loss of $1.7 billion in 1988.

His big mistake came 1991 with the decision to purchase NCR for $7.4 billion, in a move to bolster AT&T's computer business. The idea was that communications and computers would merge, but such a concept would not come into reality until the latter half of the 1990s with the emergence of VoIP players like Vonage and later, RBOCs like AT&T offering VoIP service.

Allen said in an interview in 2005 with the Associated Press after SBC announced it would acquire AT&T that its purchase of NCR was one of his "regrets" as CEO of the company in the late '80s and into late 1990s.

"The deal was praised at the time for being the smart thing to do because of the convergence of technology and communication," he said, adding, "We didn't manage it well."

And it wasn't long after AT&T bought NCR that the cracks began to show. In 1993, the computer unit produced a year-end $1.287 billion net loss on $7.265 billion in revenue.

Shortly after NCR was renamed AT&T Global Information Solutions (GIS), the telco in 1994 decided to spin off the company, and in 1996, changed its name back to NCR.

Another gaffe was its failed attempt to merge with SBC. Eight years before it ultimately succeeded in purchasing its old parent, SBC and AT&T had been discussing the possibility of merging. However, the talks ended without a deal following protest from telecom regulators.

The final mishap that occurred under Allen's watch was the lack of a CEO successor. Already under fire from Wall Street, AT&T made a head-scratching decision to appoint John Walter, the former head of printing company R. R. Donnelley & Sons, as CEO.

After nine months on the job, AT&T's board realized that Walter was not the best fit for the job. According to a New York Times report citing people close to the company at the time, Walter and Allen clashed over the strategic direction of the company, including entering the local phone business, investing in wireless, and whether AT&T should invest more in domestic or international initiatives.

Ultimately, the top job went to C. Michael Armstrong, who saddled the company with billions of dollars in debt after purchasing two cable operators--Tele-Communications (TCI) and Media One--in a bid to get into the local phone business.

To be fair, not everything that Allen did was completely wrong at AT&T. He spun off Lucent Technologies in 1995 and got AT&T's wireless business going by purchasing McCaw Cellular.