Mum's no longer the word

Who knows what is going to come of the surprising romance between SBC and AT&T? Certainly, no particular insight on the match is available here.

But whatever happens—including the probability that the famous-though-secret talks go nowhere, leaving virile SBC in its several booming businesses and a depressed and confused AT&T in whatever businesses it currently believes itself to be in—the public aspects of the romance teach us nearly as much about AT&T as its consummation would.

Whatever else you might think about AT&T, you would have to admit that in the past, it was remarkably adept at keeping its big secrets secret. This is the megacorporation (a synonym for "information sieve") that kept divestiture under wraps until the last moment. Bob Allen, an up-and-coming Bell System executive, was in an excellent position to observe how to keep big secrets and the benefits of keeping them.

Allen learned his lessons well. As AT&T chairman, the mild-looking Allen has specialized in strategic shock, nearly always flawlessly executed to ensure that he retained the initiative during the critical period immediately following a big move. Consequently, Allen's version of events and their proper interpretation came to be the dominant version—at least until economic results came in a year or more later. Even Allen's acquisition of NCR, a catastrophe that in retrospect seems to have been all too predictable, received positive reviews for many months, thanks largely to the way Allen seized the communications initiative from the jump.

Never was the importance of controlling the message more important than when Allen stunned the business world with trivestiture in 1995. Judging by the financial results to this point, it looks like Allen chose to sail on the wrong flagship in 1995, but the contemporary reviews were that AT&T was a global services juggernaut that Allen had liberated from the clutching constraints of the manufacturing and software businesses.

AT&T has had a tough, tough time since trivestiture. Prominent executives have jumped or been pushed out of the executive suite at a dizzying pace. The financials reek. The new president, John Walter, came on board in a flak storm, curiously without much of an effort by the AT&T information machine to return and suppress fire. Now, when the skies are the darkest they have been, the SBC talks leak well before the parties are ready to come to an agreement. The company that kept the big things quiet fails at its well-practiced specialty when the chips are really down.

I don't know the particulars. But I am confident of three things. One, neither Allen nor the top SBC executives involved wanted news of the talks to leak when it did because they did not stand to benefit. Two, the leak came from the AT&T camp. Three, it came from a senior source well-connected to the talks who doesn't like the way Allen is directing AT&T.

The plumber may or may not have wanted to sabotage the SBC talks. I believe the plumber clearly wanted to sabotage Allen. I further believe the plumber succeeded.

If the talks go ahead, SBC has the leverage, not AT&T. The leak added to SBC's leverage by exposing how isolated Allen is within his own team. If the talks don't go ahead, Allen is waist-deep in rising hot water.

Press accounts, although unconfirmed by the principals, indicate that Allen was pursuing the SBC talks without Walter's involvement. When two big, capable corporations merge, one management team establishes ascendancy over the other, the optimal goal of course being the subsequent creation of a third team composed of the best players and practices of the original two. Merger talks often hit the rocks because neither team can establish—or is willing to concede—ascendancy. This normally happens late in the talks.

Perhaps Walter would have had to give way eventually. After all, SBC is well-run. AT&T has been an executive bleeder for several years. Walter himself has only six months of experience in the industry.

But Allen didn't wait until the end game. He apparently threw him over right away. Allen has already said that AT&T needs a chief operating officer other than himself. Walter certainly seemed to be his choice. But if A&T doesn't merge with SBC and if SBC doesn't run the new company, Allen is left without a leader. In throwing Walter over, he threw himself over the side, too.

Or, to put it more precisely, the plumber, by leaking the news that Allen had discarded Walter, put Allen in the drink along with the hapless Walter.

Whoever the plumber is, he or she must be a formidable chess player. Allen must be looking at the board and thinking, "Checkmate."