A slimmer AT&Twill compete fiercely in the world of high technology
No longer do we perceive that our business will be limited to telephony or, for that matter, telecommunications. Ours is the business of information handling, the knowledge business. And the market that we seek is global.
Such was the corporate philosophy set forth by AT&T in its 1980 annual report to stockholders. Suddenly, a year later, the words have taken on real meaning—not only for the Bell System's 3 million shareholders but for just about everybody the world over.
Two weeks after the far-reaching agreement that settled the U.S. Government's seven-year-old antitrust suit against the company, AT&T officials are still trying to absorb all the implications. After 48 years as the world's largest corporate monopoly, Ma Bell faces the prospect of being freed from federal regulation to compete, like any other company, in whatever businesses it chooses to enter. The consequences for consumers and businesses alike are certain to be historic. Says Ralph Acampora, an investment analyst for the New York City brokerage firm of Kidder Peabody & Co.: "It is Gulliver's Travels retold for the 1980s. The Lilliputians, like the Government, controlled a big giant. But one at a time, the strings began to fall away. Now we are confronted by this company with tremendous strength and resources that has been dormant for years and has at last broken free."
Not since the breakup of John D. Rockefeller's Standard Oil empire in 1911 has there been a more complex and potentially revolutionary restructuring of a U.S. corporation. The agreement opens the way for AT&T to divest itself of the least profitable and slowest-growing side of its business, local telephone service, by spinning off its 22 operating subsidiaries. At the same time, the company will be permitted to hang on to its very profitable and rapidly growing long-distance operations, which in 1980 accounted for more than 50% of AT&T's $51 billion in revenue. Even more important, the company will be able to keep its $12 billion-a-year Western Electric Co. manufacturing subsidiary and its highly prized Bell Laboratories, the world's largest and most sophisticated industrial research facility.
Though the settlement gave the Justice Department much of what it had sought in its original antitrust suit, the divestiture will also be of enormous potential benefit to AT&T. Taken together, the changes will enable a slimmed-down—and toned-up—company to plunge head long into the explosively expanding new world of computer-based information processing, a postindustrial business universe that embraces everything from personal computers to space technology, and all points in between.