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Am I the only one who sees the parallels between AT&T's "Project Grand Slam" breakup and the ill-fated "Operation Grand Slam" staged by movie bad guy Auric Goldfinger?
Both schemes are the product of highly centralized management. Both come across as awkward, complicated plans motivated by short-term considerations rather than reasonable long-term strategies.
And as with Goldfinger, whose plan to boost gold prices by nuking Fort Knox ended with his getting sucked out the window of a de-pressurizing airplane, there's a substantial risk that AT&T and its soon-to-be offspring could end up in their own freefalls with no parachutes (other than golden) in sight.
Not that the AT&T plan is doomed to failure; there's no James Bond out there that we know of, waiting to gum up the works. (Only the likes of John Malone, who's more like Dr. No.) The company's wireless and broadband businesses continue piling up customers and a post-election turnaround by the financial markets could help bolster AT&T's ailing share price, with or without an incipient breakup.
But the motivation for rushing to action lies in hopes of pleasing the same Wall Street herd that until a recent turnaround largely had backed the expensive, convergence-based vision that chairman and CEO C. Michael Armstrong brought to the table about three years ago.
That prospect is as chancy as that of ever appeasing Goldfinger's greed. Even as details of AT&T's plan trickled out, financial market pundits already were dissecting its potential failings. AT&T Wireless as a separate company? Despite strong operating performance, the unit's tracking stock has tanked since its IPO. AT&T consumer long distance as a separate security? What's the value in owning shares of a shrinking business? Then there are the time-consuming, distracting and myriad regulatory, tax and market hurdles AT&T must clear just to execute its new strategy. And on, and on.
Like Goldfinger, the plot seems challenged by the very complexity that necessitated its birth. Instead of simply continuing to hoard gold to enhance its value, Goldfinger had to assemble his own army of henchmen, glamorous pilots and Commie technologists plus an atomic weapon to boost the price of his assets. He must have had the same investment bankers as Ma Bell.
Likewise, AT&T's strategy has gone from the simple (provide all of an individual client's communications business in order to boost profits and reduce churn) to the complicated (let each component of the bundled service offering attack the customer through cross-branding and other relationships) in hope of achieving its original goal.
But timing is everything, and AT&T has had the bad luck to try executing its plans during the worst stock market performance in years (rivals Worldcom and Sprint have seen their shares drop more than 50 percent this year). As Strategis Group's Elliott Hamilton put it, "I wonder if the market conditions were better and the company could wait six months or even a year, if the decision to split up would be made?"
That's a question not even Bond could answer.
Bill Menezes
Editor
Afterthought: Some of the best video I've seen in recently-other than the Kansas City Chiefs' pummeling of NFL champion St. Louis-is the streaming version of an exclusive interview with outgoing AT&T Broadband chief engineer Tony Werner by Broadband Week and The Cable Channel. Like the businesses we cover, we plan to show you a lot of this type of cross-platform convergence in the years ahead. Check it out at www.cablechannel.com/framevideoreal.htm.
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