AT&T

In September, 1995 AT&T, a U.S. telecommunications company with $75 billion dollars in 1994 sales and 303,000 employees, announced a major restructuring. The restructuring involved splitting the company into three new, fully independent companies:

  1. A network service company that will retain the AT&T brand name and will encompass about $50 billion of AT&T's 1994 sales.
  2. A communications equipment company encompassing $20 billion of AT&T's 1994 sales.
  3. A computer company, built around the 1990 acquisition of the computer company NCR Corp., with 1994 sales of about $5 billion.
AT&T announced that the restructuring would involve the elimination of about 48,000 jobs. AT&T offered those employees losing their job a special severance package that included lump sum payments and retraining opportunities.

Explanations for AT&T's restructuring centered on the changing telecommunications environment. Rapidly advancing computer and communications technology as well as a world-wide regulatory push to promote private-sector competition in telecommunications are raising new business challenges. Separating AT&T into three independent businesses gives these business more flexibility and focus. The split also avoids the necessity of ongoing bureaucratic resolution of business conflicts and customer concerns arising from the fact that major customers of the AT&T telecommunications equipment business are also emerging competitors to the AT&T network operations business.

topic Enterprise Restructuring in the FSU