AT&T; BREAKUP II : PROFILE : Allen Known for Adapting to Changing Market

To help earn his keep at Wabash College, halfback Bob Allen patched holes on the football field after every home game. During a close battle with a No. 1-ranked rival, when he had a chance to intercept a pass just 20 yards from the goal line, he stepped into a hole, stumbled and missed the ball. Wabash lost by a point.

Robert E. Allen, chairman and chief executive of AT&T; Corp., has often laughed about that misstep from his 1950s college days in Indiana, calling it “a good lesson about quality.”

At 60, Allen continues to learn by tripping up. Hence his dramatic decision to break up the telecommunications giant--huge pieces of which he had been instrumental in assembling--into three parts: communications services, communications equipment and computer manufacturing.

Although investors applauded the move Wednesday, boosting AT&T; shares by $6.125 to $63.75, it was widely viewed by technology industry analysts as partly an admission of AT&T;’s failure to make its $7.5-billion purchase of computer maker NCR Corp. work.

Given that Allen pushed hard for the 1991 NCR deal and has long touted the supposed benefits of having a wide range of loosely related businesses under one roof, the breakup plan signals that he is a CEO capable of recognizing mistakes and trying to remedy them, industry watchers said. “He can take a fresh look [and] is willing to take a different approach,” said Robert B. Wilkes, an analyst with the Brown Bros. Harriman investment firm in New York.

An only child, Allen was born in Joplin, Mo., in 1935 but spent most of his youth in Indiana. He learned his first lessons about being a risk-taking entrepreneur from his father, who quit a steady job with a five-and-dime chain to buy a bankrupt children’s clothing store.

Allen joined the Bell System in 1957 and moved steadily up the corporate ladder, succeeding his mentor, James Olson, who died of cancer just days before the company’s annual meeting in 1988.

Since then, Allen has concentrated on frequent revampings of AT&T;, for which he earns generally favorable marks from Wall Street. Hal Burlingame, AT&T;’s senior vice president of human resources, who has worked with Allen for more than 10 years, said Allen’s strength is listening. “Executives are often on broadcast mode,” Burlingame said. “He is on listen mode.”

Sam Ginn, chairman and chief executive of AirTouch Communications, the spun-off wireless arm of Pacific Bell, agreed that Allen tends to appear quiet and almost shy. In reality, however, Ginn said, he is “a tough, hard-nosed manager who does what he has to to make the organization work.”

Ginn, who has been a “professional friend” and occasional adversary of Allen for 25 years, said Allen’s pattern has been to quietly analyze a situation and then take forceful steps to rectify any perceived problems. The announcement of the breakup is consistent with that.

“He had a dysfunctional organization, with a computer business that was bleeding through an open artery,” Ginn said. “AT&T; had accumulated a heavy debt load. [With the breakup announcement], he has rationalized the business.”

Often described as gutsy, Allen got his first job straight out of college with Indiana Bell. He later moved to Bell of Pennsylvania, then became corporate executive vice president and chief financial officer in 1983. In February, 1985, he was named chairman and CEO of AT&T; Information Systems, the unit that took much of the financial hit when AT&T; incurred losses from computer sales. He became president and chief operating officer in September, 1986.

His low-key, soft-spoken style contrasted sharply with that of his high-energy mentor, Olson. Colleagues say Allen enjoys delegating responsibility. “He gives people permission to learn and fail [as long as] they continue learning,” Burlingame said.

During his tenure, he has successfully upended the entrenched corporate culture that represented the old Ma Bell monopoly. Among other changes, he sought in early 1993 an “upward appraisal” of his management style by lieutenants in his executive committee. The feedback prompted him to air his opinions more freely and push harder for firm decisions.

But most of the big decisions of recent years have Allen’s stamp on them. In addition to NCR, he pursued and won McCaw Cellular Communications, a bold, $12.6-billion acquisition that gave the company needed oomph in emerging areas of telecommunications.

After the breakup, Allen will remain chairman of the largest of the three units, the communications company, which will retain the AT&T; name.

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Bio: Robert E. Allen

Allen, who worked his way up to chairman of AT&T; after joining the Bell System in 1957, has concentrated on continually reinventing the company. His move to break AT&T; into three pieces could be his most challenging yet.

Age: 60

Residence: Short Hills, N.J.

Education: Bachelor’s degree in political science with a minor in economics from Wabash College in Crawfordsville, Ind., in 1957

Family: Married to college sweetheart, Betty; five adult children

Resume: Chairman and chief executive of AT&T; Corp. and a member of the board of Bristol-Myers Squibb Co., PepsiCo Inc. and Chrysler Corp. Also a member of the Wabash College Board of Trustees, the Business Council, the U.S.-Japan Business Council and the Business Roundtable

Quote: “The single purpose [of the breakup] is to give AT&T;’s businesses the nimbleness and the agility to seize the best of their market opportunities. This is the next logical turn in our journey since divestiture.”