The Negotiator Magazine

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Obviously, if one is in the buggy whip business as the age of the automobile dawned, "sticking to your knitting" is ill-starred advice. Leaping into another unrelated and complex business field without experience is usually equally disastrous. AT&T proved the truths in these maxims in surprisingly short-order.

It switched in a moment from long distance carrier to cable T.V. proprietor as its future core business and salvation. The rush to the new Galconda let lose the worst in its management. With almost no cable experience on its management team, research on long distance and cable markets that did not expose the WorldCom accounting fraud and "key findings [on cable T.V.] blatantly ignored " (pp. 140-141), in less than one year, AT&T executives, some operating as "lone rangers," closed deals at enormous premiums for $110B in cable T.V. properties and assorted other elements. These deals, often concluded without proper due diligence or even solid financial review and without protection for downside risks from commitments of huge cash payments, took down the company.

The stock holders, the employees and the public, of course, paid the final price for the disaster.

Recommended.

John Baker, Ph.D.
Editor

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'End of the Line : The Rise and Fall of AT&T' End of the Line : The Rise and Fall of AT&T [Amazon.com]
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July 2005