AT&T; Names Allen as New Chief Executive : Earnings Jump 10.6% on 2.8% Revenue Gain
Moving quickly to ensure management continuity, American Telephone & Telegraph announced Wednesday that company President Robert E. Allen was named, as expected, to succeed the late James E. Olson as chairman and chief executive.
At its emotion-charged annual meeting in Denver, AT&T; also reported that its first-quarter earnings were up a healthy 10.6% to $492 million. Revenue was up 2.8% to $8.35 billion, reflecting somewhat improved sales.
“We’re encouraged by the revenue growth posted in the first three months of the year, our highest quarterly increase in two years,” Allen said. “Just as important, we sustained the hard-won improvement in our cost structure achieved last year.”
He predicted that the company’s year-long profit would show about the same percentage gain as the first-quarter earnings did. Still, sales of computer and telecommunications equipment lagged while revenue from services--mainly long-distance calling--increased 8.2%.
The atmosphere at the shareholder meeting was tense, at least partly because of a resolution submitted by a white-supremacist group, the National Alliance, based in Arlington, Va. Herbert Poinsett of Norcross, Ga., spoke in support of the proposal, which maintained that blacks are intellectually inferior and that affirmative action, therefore, can only weaken a company and hurt morale.
“We find the intent and the wording of this proposal highly objectionable,” Allen countered. More than a dozen shareholders also condemned the proposal, which won only 8.6% of the company’s voting shares.
In rising to preside over the meeting, Allen, 53, called it “a bittersweet moment.” But he vowed to “continue leading AT&T; on the course Jim set out for us.”
Allen’s election by the board of directors came late Tuesday. Rawleigh Warner, retired chief of Mobil and an AT&T; director, told shareholders that Olson had told him two weeks ago that “should anything happen to him, Bob Allen was his natural successor.”
Olson succumbed to cancer on Monday after a brief bout with the disease. In his 19 months at the head of the nation’s eighth-largest company, he integrated AT&T;’s computer operations into its telecommunications business and improved earnings by cutting staff and expenses. Boosting equipment sales was next on Olson’s agenda.
Allen made that his goal as well, telling reporters: “No business can live by cost control alone. It must grow.”
The board, Allen said, has not yet decided on a new president. Speculation centered on Randall Tobias, 45, youngest of AT&T;’s three vice chairmen.
