Magazine

Table: The Challenges for AT&T's Heir Apparent


AT&T (T) President David Dorman is expected to take over as CEO later this year. Here are the prospects for the company in several key areas, based on a scale of one to four stars.

CONSUMER SERVICES

OBSTACLE: AT&T faces stiff competition from local and wireless phone giants wading into long-distance. First-quarter revenue fell 22%, to $3.1 billion.

OUTLOOK: The unit's chief, Betsy Bernard, is cutting

costs and offering new services. Still, expect the Bells to take market share in the months ahead.

RATING: One Star

BUSINESS SERVICES

OBSTACLE: The unit is losing customers--it has 4 million today, down from 10 million five years ago. First-quarter revenues slipped 8%, to $6.5 billion.

OUTLOOK: Dorman has invested $200 million in innovative new services for businesses and tripled the number of reps who sell data and local phone services.

RATING: Two Stars

MANAGEMENT

OBSTACLE: AT&T has lost top managers, in part because of Armstrong's controlling style. The business services unit has had five leaders in five years.

OUTLOOK: Dorman is regarded as a team builder. He has recruited top talent from outside the company, including Sprint's Chris Rooney to run AT&T Government Markets.

RATING: Three Stars

DEBT

OBSTACLE: With so many telecom bankruptcies, investors worry about AT&T's debt load. Recently, the company's bonds were trading at 90 cents on the dollar.

OUTLOOK: Fears are overblown. The sale of the cable unit will drop AT&T's debt load to $17 billion. That will give it a debt-to-earnings ratio of 1.7, best in the long-distance industry.

RATING: Three Stars

Data: BusinessWeek, AT&T reports


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