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Telecom Mega-Merger / Company Town | THE STRATEGIST

Turning Around a Battleship--Fast

Bold decisions and disciplined analysis are the strengths of AT&T Chief Executive C. Michael Armstrong.

June 25, 1998|STUART SILVERSTEIN | TIMES STAFF WRITER

In his rare moments of free time, AT&T Corp. Chief Executive C. Michael Armstrong loves to hit the road on a Harley-Davidson motorcycle.

These days, he's also trying to run hog wild through the telephone and cable television industries.

The giant deal announced Wednesday for AT&T to acquire cable-TV operator Tele-Communications Inc. for $46.5 billion demonstrates Armstrong's determination to radically reshape the nation's largest telecommunications company. It also reflects the bold style Armstrong demonstrated during his career as an executive at IBM, Hughes Electronics Corp. and, since November, AT&T.

"He's not afraid to make big decisions," said Malcolm Currie, who was Armstrong's predecessor as chief executive at Hughes.

At Los Angeles-based Hughes, those decisions involved eliminating thousands of jobs and shifting the company's focus from the defense and auto industries to commercial electronics, space and telecommunications.

AT&T, likewise, announced in January that it would slash 15,000 to 18,000 management positions. But observers insist that Armstrong, 59, is not a corporate slash-and-burn artist.

"He's sort of a Renaissance man, as far as business is concerned," said USC management expert Warren Bennis, referring to Armstrong's ability to move from one industry to another with relative ease. "He's an incredible diagnostician of what needs to be done."

Analysts say the deal to buy TCI, the nation's largest cable operator, reveals Armstrong's vision of smashing the old AT&T bureaucracy while trying to develop the natural links between the telephone and cable businesses.

The proposed TCI deal, Currie said, "gives AT&T a new sense of direction. AT&T has been struggling. The long-distance business is all they've had, and it's been getting chipped away. This gives them a way to revitalize the business. . . . He's doing exactly what the board of directors wanted when they brought him on."

Howard Laitin, who worked with Armstrong before retiring five years ago as a chief scientist for Hughes in El Segundo, described the AT&T leader as "a global strategist. I'm sure that he sees TCI as contributing in many ways to providing the technology for the entry into local telephone markets."

All the same, Armstrong faces criticism in some quarters for the TCI deal. Despite spending his entire career with high-tech companies, Armstrong is admired more for his general business and marketing skill than for a deep understanding of technology--a fact that, some critics say, could trip him up at AT&T.

A. Michael Noll, a communications professor at USC, said the deal suggests that Armstrong doesn't recognize the enormous cost involved in transforming TCI's cable lines into two-way systems required to carry voice and data transmissions.

Personally, Laitin said, Armstrong is "extremely charming, very likable. . . . At the same time, he doesn't suffer idiots or time wasted. You know that with every dealing with him, you're on trial.

"He does a lot of listening and a lot of questioning," Laitin added. "He basically pushes his people heavily to think and rethink and analyze and reanalyze. He's very cordial, but he drives his people into doing very deep analysis."

Armstrong grew up in a middle-class neighborhood in the Detroit area and went on to play football at Miami (Ohio) University. After suffering an injury that led to the loss of his athletic scholarship, Armstrong dropped out of school and took a job unloading trucks in Detroit. Then he took time off to travel in Europe, an experience he later called a "departure point" in his life.

Later on, Armstrong returned to Miami U., earning a degree in business and economics in 1961. He joined IBM as a systems engineer and spent 31 years with the computer company, climbing to the rank of senior vice president and head of its international operations.

From there, he joined Hughes as its chairman and chief executive and held that post until he took the helm at AT&T.

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