T AT&T Inc

By James R. Hagerty 

Robert E. Allen announced wave after wave of job cuts when he was chief executive of AT&T Corp. from 1988 to 1997. He spent billions of dollars on a doomed effort to diversify the phone company into computers. He failed to arrange for a smooth succession as his retirement neared.

Yet some former colleagues say Mr. Allen did well amid extremely difficult circumstances. He took charge just four years after AT&T lost its monopoly of the U.S. phone market, and the company was still learning to compete. A revolution in electronics was merging the worlds of computers and communications equipment. No one knew how much cellphones and the internet would change the world.

"He had to find his way through uncharted territory," said Michael Sovern, a former president of Columbia University who was on AT&T's board.

Mr. Allen admitted he made some errors. "If everything we did was absolutely perfect or correct, maybe we'd be given another name and be called God or something," he told The Wall Street Journal in 1996.

Mr. Allen died Sept 10 of complications from a stroke. He was 81.

"He did not come on as a big robust personality," said Harold Burlingame, who headed human resources under Mr. Allen. "He came on as a quiet, thoughtful person."

Some found him remote. "I just can't be warm and fuzzy with everybody all the time," he said. He presided over more than 100,000 job cuts as the former monopoly, known as Ma Bell, slimmed down and automated. In 1996, after announcing yet another round of cuts, AT&T bought full-page newspaper ads, signed by Mr. Allen, urging others to hire its former employees, "among the best trained anywhere."

Robert Eugene Allen was born Jan. 25, 1935, and grew up in the small town of New Castle, Ind. His father ran a children's clothing store and his mother was a teacher. He married the former Elizabeth Pfeffer while pursuing a political science degree at Wabash College in Crawfordsville, Ind. (The school motto was: "The student is expected to conduct himself at all times, both on and off campus, as a gentleman and a responsible citizen." Mr. Allen often said that was all the direction he needed.) He and his wife moved into a $27.50-a-month Quonset hut in a swampy neighborhood called Mud Hollow.

After graduating, he got a management trainee job at Indiana Bell, the local unit of AT&T, where he learned how to operate a switchboard. Cautious and methodical, he ascended the ranks, becoming chief financial officer of AT&T in mid-1983 and president in 1986. That made him No. 2 to his mentor, James Olson, the chairman and CEO. Less than two years later, Mr. Olson died of cancer, and Mr. Allen took over.

He was determined to expand in computers. AT&T had invented the transistor and created the Unix computer operating system. It knew a lot about computers; it just didn't know how to make money from them. As phone and data services converged, AT&T feared computer makers would take over telecommunications -- unless it could fight them on their turf.

AT&T invested in computer makers Ing. C. Olivetti & Co. and Sun Microsystems Inc. It won a $100 million order to sell computers and related gear to American Airlines. But AT&T's computer business kept piling up losses. Some executives wanted to ditch it.

Mr. Allen kept trying. In 1991, AT&T bought NCR Corp., the former National Cash Register, which had evolved into a maker of automated teller machines and computers, for $7.4 billion.

Mr. Allen hoped NCR would give AT&T critical mass in computers. But NCR was struggling itself to stand out in the overcrowded computer market. Combining two laggards didn't create a winner.

Mr. Allen got more kudos for thrusting AT&T into the cellphone business with the 1993 acquisition of McCaw Cellular Communications Co., though some critics said he should have moved faster in that direction.

In 1995, Mr. Allen announced a surprise plan to spin off the telecom equipment business, which became Lucent Technologies Inc., and the computer arm, which reverted to the old NCR name.

For Mr. Allen, it was time to find a successor. He persuaded the board that the best bet was John Walter, recruited in 1996 from a printing company, R.R. Donnelley & Sons, with a $5 million signing bonus. Within months, Mr. Allen had a change of heart: He told the board that Mr. Walter wouldn't make a great CEO after all.

The board began losing confidence in Mr. Allen. In 1997, it recruited another outsider, W. Michael Armstrong, as CEO and sent Mr. Allen into retirement at age 62.

AT&T's struggles continued. Profits from long-distance calls plunged, and a strategy of buying cable TV networks was a costly flop. In 2005, a humbled AT&T agreed to be taken over by SBC Communications, one of the regional phone companies that had split off from Ma Bell in 1984. SBC decided to change its name to AT&T Inc.

Edward Whitacre Jr., the former chairman of SBC who led the takeover, described Mr. Allen as "a classy guy" and said he had done his best to navigate through a treacherous era. "Those were difficult times to know what to do," Mr. Whitacre said.

Mr. Allen's retirement left more time for golf, a lifelong passion. He split his time between homes in Village of Golf, Fla., and Convent Station, N.J. He is survived by his wife of 60 years, Betty, four children, 11 grandchildren and two great grandchildren.

Write to James R. Hagerty at bob.hagerty@wsj.com

(END) Dow Jones Newswires

September 16, 2016 12:59 ET (16:59 GMT)

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