IP: AT&T announces major restructuring for 21st Century [

[Dave Farber <farber () central cis upenn edu>]

Pulled off of ATT home page...


Adele Ambrose
908-221-6900 
aambrose () attmail com 


Jim Byrnes 
908-221-7876 
jbyrnes () attmail com 


Dick Gray 
908-221-5057 
ragray () attmail com 


Jane Moulton 
908-221-8422 
jmoulton () attmail com 


FOR RELEASE WEDNESDAY, SEPTEMBER 20, 1995 


AT&T announces major restructuring for 21st Century 


NEW YORK -- AT&T Chairman Robert E. Allen today announced plans for a
strategic restructuring that would separate AT&T into three publicly
traded, global companies.


Allen said the company was taking this bold step to capitalize on the
opportunities in each business' segment of the global information
industry -- communications services, communications equipment, and
transaction-intensive computing.


Under the plan, AT&T shareowners would hold shares in each company. A
fourth business -- AT&T Capital Corporation -- would be sold.


The AT&T Board of Directors approved pursuing the restructuring plan
at a special meeting this morning. AT&T hopes to complete all
transactions by the end of 1996.


"Changes in customer needs, technology and public policy are radically
transforming our industry," said Allen. "We now see this restructuring
as the next logical turn in AT&T's journey since divestiture. It will
make AT&T's businesses more valuable to our shareowners, even more
responsive to their customers, and better able to focus on the growth
opportunities in their individual markets.


"Under the plan announced today," Allen said, "one of the new companies 
would focus on providing the world's best `anytime, anywhere' communications 
and information services."


Operating under the familiar "AT&T" brand name, the services company
would consist of AT&T's current Communications Services Group, the
AT&T Universal Card Services Corporation, the newly established AT&T
Solutions consulting and systems-integration organization, and AT&T
Wireless Services, formerly McCaw Cellular Communications.


The company also plans to create an AT&T Laboratories unit around the
core of Bell Laboratories people dedicated to research and development
in communications services. In 1994, AT&T's services units had
combined revenues of more than $49 billion, making them the world
leader in the communications services market.


"AT&T's product and systems businesses, along with world-renowned Bell
Laboratories, would constitute a communications systems and technology
company that would immediately be the global leader in its industry,"
said Allen.


It would include AT&T's Network Systems Group, Global Business
Communications Systems, Consumer Products, AT&T Paradyne and
Microelectronics. In 1994, these businesses had total sales of
approximately $20 billion. The new company, as yet unnamed, would be a
powerful competitor in the fast-growing communications systems market.


AT&T is considering an Initial Public Offering for approximately 15
percent of the shares of the new equipment company in the first half
of 1996.


"Our services and systems businesses are at the intersection of
tremendous change and opportunity," said Allen. "This restructuring
ensures that each can follow the path of greatest opportunity without
worrying about bumping into each other along the way."


The company's computer unit, AT&T Global Information Solutions, would
be launched as an independent company by spinning it off to AT&T
shareowners, following an aggressive turnaround effort also announced
today.


GIS Chairman and CEO Lars Nyberg is taking decisive action to create a
smaller, more focused and swifter business. GIS will continue to
develop, manufacture and market computer platforms for any industry,
but will focus its unique capabilities on the three key industry
segments where it has a leading position -- financial, retail and
communications.


"Lars Nyberg is the right leader to get our computer business back on
track," said Allen.  "His goal is to be world-class in a few targeted
industry segments and in delivering high-quality computer platforms
and services. I believe that's not only worth doing, but doable. GIS's
customers and employees can count on AT&T's complete support during
this transition."


Nyberg assumed his post in June following a 20-year career at Philips
Electronics NV, where he turned around that company's computer
business.


As part of its turnaround effort, GIS will halt manufacture of
personal computers, ceasing distribution through value-added resellers
and retail outlets. It will continue to offer customers personal
computers as part of total solutions through an agreement with an
outside supplier that it expects to announce soon.


GIS will continue to support and service all its current hardware and
software installations and will aggressively market its service
capabilities to all industries. And it will continue to have a strong
commercial relationship with Bell Laboratories.


GIS -- which currently employs about 43,000 people in more than 120
countries -- also announced a major cost-cutting initiative that will
lead to the elimination of approximately 8,500 jobs.


AT&T will incur a one-time, pre-tax charge estimated at approximately
$1.5 billion against third-quarter earnings to cover the costs of the
GIS restructuring, reducing 1995 earnings by $1 billion, or 66 cents
per share. Excluding this charge, AT&T said it continues to target
earnings-per-share growth of at least 10 percent in 1995.


In addition, AT&T plans to sell its remaining interest in AT&T Capital
Corporation to the general public or to another company. AT&T holds in
excess of 80 percent of Capital Corp. shares, having sold a minority
interest to the general public in 1993. Capital Corp. is already one
of the largest equipment leasing and financing companies in the United
States. In 1994, it had revenues of approximately $1.4 billion and was
profitable.


Proceeds from the sale of Capital Corp. and from the initial public
offering of the new equipment business will be used to retire current
AT&T debt, giving each of the new businesses balance sheets
appropriate to its industry.


The company intends to adjust each business' capital structure to
ensure that it has the flexibility to raise resources as it needs
them. AT&T recognizes the importance of its relationship with its debt
holders. The company said its ability to satisfy its obligations to
its debt holders will not be impaired as a result of these
transactions.


AT&T said that each of the businesses it is establishing will have
everything it needs to meet customers' needs. Each already has
seasoned management and a productive work force.  Each has significant
global operations. The service, equipment and computer businesses each
has the sophisticated systems-integration capabilities necessary to
provide complete solutions to its set of customers. And, where it
makes sense to partner in serving a customer's needs, the new
businesses could establish commercial relationships with each other.


"Our first priority throughout this transition period is to ensure
that none of our businesses misses a beat on any customer commitment,"
Allen said.


Financial details on the transactions will be released as they become
available in accordance with securities regulations.


AT&T, which currently has some 303,000 employees, said it is too early
to estimate the exact employment impact of the planned restructuring.
On the one hand, all three new companies will need additional
resources to establish themselves as free-standing, independent
companies.  However, each company participates in a hotly competitive
market and will continue to size its operations as efficiently as
possible. On balance, it is likely that the combined new companies
will have fewer employees than the present AT&T.


The company said it will ensure that any employees dislocated by the
restructuring will have access to job opportunities across the total
corporation, as well as to a full range of assistance, ranging from
job counseling to retraining.


Allen, who will continue as chairman and CEO of the new AT&T, will
chair a committee of senior AT&T executives to oversee the
restructuring. The committee members are Hal Burlingame, senior vice
president of Human Resources; Marilyn Laurie, senior vice president of
Public Relations and Employee Communications; Rick Miller, executive
vice president and chief financial officer, and John Zeglis, senior
vice president and general counsel.


Allen also appointed senior officers to lead the transition of each
new company. They are: Alex J.  Mandl, CEO of the Communications
Services Group, for the communications services company; Richard A.
McGinn, CEO of the Network Systems Group, for the systems and
technology company; along with the incumbent CEOs of GIS, Lars Nyberg,
and AT&T Capital Corporation, Thomas C. Wajnert. Allen said that the
company's Board of Directors would name the permanent executive
leadership at the appropriate time.


All of these transactions are expected to be tax-free to shareowners.
AT&T intends to seek rulings from the Internal Revenue Service with
respect to the tax-free treatment of the transactions.  While AT&T
does not anticipate the need for regulatory, Department of Justice or
decree court approvals, the company did call attention to the
complexity of the issues to be resolved in the months ahead.


For example, immediate disposition of AT&T's final 20 percent interest
in AT&T Capital Corp.  would require modifications to certain existing
agreements. While AT&T is confident of its ability to resolve all
these issues, there can be no guarantee that the restructuring plan
will be implemented or that changes in the plan will not be made. The
investment banking firm of Morgan Stanley and the law firm of Wachtell
Lipton Rosen & Katz are serving as advisers to AT&T.




Editors' Note: AT&T Chairman Robert E. Allen will hold a news
conference at 2 p.m. EDT at AT&T's World Headquarters at 32 Avenue of
the Americas in New York City. The news conference will also be
available by teleconference. Reporters in the United States can call
1-800-260-0718 or 612-235-1623 from outside the U.S. Beginning at 5
p.m. EDT today, a rebroadcast of the news conference audio will be
repeated for 48 hours at 1-800-475-6701 in the United States or
612-365-3844 from outside the U.S.; access code 602744.