Withering on the vine

John Walter failed Bob Allen. He is out at AT&T. Allen and Walter Elisha failed AT&T shareholders and employees. But they are staying. So is John Zeglis.

Zeglis hasn't failed anyone yet, wherein lies his danger.

Meanwhile, AT&T is withering.

AT&T lacks management and a strategy. Despite powerful assets, particularly its global brand, its future is up for grabs.

Allen is chairman and CEO of the fading giant. Elisha is a prominent AT&T board member and the chairman and CEO of Springs Industries. Zeglis is vice chairman of AT&T and Allen's favored son. Zeglis replaced Walter in the latter role, which, judging by Allen's history, is not for the faint of heart.

Until July 16, Walter was the president and chief operating officer, a job he had held for all of nine months. Walter joined AT&T with Allen's enthusiastic support and the understanding he would succeed Allen as CEO next January.

Allen dismissed critics who alleged that Walter would struggle because he lacked telecom industry experience.

Walter walked into a flak storm on Day 1. The November 1996 press conference introducing Walter as AT&T's next chief was a dismal failure. Walter was completely unprepared for the criticism about his professional background.

Walter should have walked into that press conference fully briefed by Allen and his officers about this obvious line of questioning. He should have been prepared to turn hostile questions around the way a confident hitter sends high heat out even faster than it comes in. But Allen and his team left Walter to fend for himself.

The criticism continued for several days, giving this corporate succession story an unusually long shelf life. Walter was taking shots from every direction. Curiously, AT&T did little to return or suppress the fire.

More recently, a high-level AT&T leak revealed that AT&T was involved in merger talks with SBC, and Walter's role was that he did not have a role in the negotiations nor would he be the senior executive in the merged company. This leak triggered another huge flak storm. The AT&T gunners, again, sat the communications combat out. Walter, again, was a staked goat.

Finally, some board members told Walter that he would not be named CEO next January, and Walter resigned. In an arrogant, graceless performance, Elisha told the world that Walter lacked the "intellectual leadership" for the big job.

Thus, his reputation impugned for nine months, publicly embarrassed by his company and forced to resign by the board, Walter had to endure a final, gratuitous verbal headshot from Elisha.

Elisha, however, is just a bit player in the grotesque drama. Allen is the star - and the author. He just won't let go. Until he does, AT&T can't go forward.

Allen burns through number twos the way other CEOs burn through consultants. Just when an accomplished executive, such as Alex Mandl, appears ready to share the main stage, Allen discards him.

The servile AT&T board routinely gives Allen its complete support, even when he repeatedly and abruptly destroys the very value he just told them he wants to build - like Walter's authority in the company.

Allen picked Walter. Allen and the board knew all about Walter's background. Walter didn't have any telecom experience, but he had plenty of valuable business experience. He turned around a big, floundering company - R.R. Donnelley & Sons - by modernizing an outdated business.

That was the mission at AT&T, too. Coming in, one of Walter's assets was that he was fresh to the industry, but not naive about business or large corporations.

Nothing in Walter's background doomed him to failure at AT&T. Much in his background suggested he would succeed. I believe Walter would have made a fine AT&T CEO. I think Mandl would have, too. So would others who were shown the door in recent years, like Robert Kavnar, Randall Tobias and Joe Nacchio.

Zeglis may make a great CEO, too. Elisha indicated Zeglis is a solid candidate.

If history instructs, Zeglis' biggest problem will be Bob Allen and his slavish board.

Zeglis' success at AT&T has put his career and reputation in the greatest possible peril. When he meets with Allen, Elisha and the rest, he should make sure his back is to the wall so he can keep the action in front of him.

Walter didn't. He never had a chance.