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A plague of moles?

By Scott Bradner

AT&T must have help being as dumb as it has been of late.

Once upon a time AT&T was retirement stock. You bought it to be sure you would have income when your work-a-day world was behind you. It was safe for widows and orphans. It ain't quite that any more. From a high of $60 in April the stock closed below $24 on October 12th. AT&T stock is now making future retirees quite nervous. State and local city funds have lost most of a billion dollars over the last year by sticking with AT&T and now the managers of some of the funds want to meet with the AT&T management to find out just what the heck is going on.

One would have thought that AT&T had lost all the luster it was going to in mid 1997 when its stock got below $10. Until recently things looked much better, at least to the market, with the stock passing $60 in early 1999 and staying up there, with a few dips, until this past spring when it tanked after AT&T admitted that it was not going to meet sales and profit projections for the rest of 2000. Things have just been getting worse since then and not just because of a continuing bad record of accuracy in projection prowess.

AT&T has been making some very strange business decisions of late -- decisions outside of the normal range of Dilbert-like managerial incompetence. A few examples:

Back last spring the FCC touted the effects of a FCC-mandated reduction in fees that long-distance phone companies like MCI and AT&T have to pay local phone carriers to complete long-distance phone calls. AT&T joined in the hoopla about the lower costs that were to be seen by phone customers. Then, within a day, AT&T announced a new price structure that took away most of the reductions, and in some cases raised prices. AT&T had to back down after some very bad press including front page of the New York Times and major stories on the network news shows.

Then early this month AT&T was reported to be considering dumping its history and getting out of the long-distance phone business. It is hard to imagine what of AT&T would be left after it dumped its final "T."

Finally, on October 9th it was leaked that AT&T is considering demanding a piece of the action from commercial web sites that use its broadband network. Seems to me to be an ideal way to ensure that commercial sites use other ISPs.

It's hard to imagine that these and a number of other recent moves could be the product of a competent management group. I don't like saying that someone is incompetent so the only other option is that an AT&T competitor managed to place a mole in the AT&T management. If so the mole is earning its keep.

disclaimer: I know of no Harvard moles in AT&T (or MCI or Sprint) and the above is my speculation.