Bernard Resigns as AT&T; President
In an unexpected move, AT&T; Corp. President Betsy Bernard resigned Tuesday and was replaced by former Pacific Bell executive William J. Hannigan.
The change in the No. 2 position puts two former PacBell executives -- Hannigan and David Dorman, AT&T;’s chairman and chief executive -- at the top of the country’s largest long- distance telephone company.
Hannigan, 44, had most recently been chairman and CEO of travel reservation firm Sabre Holdings Corp., which owns Travelocity.com and other travel sites. After PacBell was acquired by SBC Communications Inc. in 1997, he served in a variety of senior positions, including president of the business sales unit.
Bernard, 48, has long been “very upfront” about wanting to be in the top spot at a major firm, Dorman said in an interview.
She had expected to do that as chief of AT&T;’s consumer long-distance business, which she headed in 2001 and which the company at one point planned to spin off. But that plan was scuttled as the telecommunications industry headed into its long slump. And with Dorman only 49, the chance that Bernard would run AT&T; seemed slight.
Bernard said in a statement released by the company that she looked forward “to finding the right leadership opportunity in the next phase of my career.”
Analysts questioned whether there was more to Bernard’s departure, given that AT&T;’s consumer sales dropped 16% in the third quarter from a year earlier and revenue from corporate customers fell 6%.
“I’m not totally buying that she’s leaving for another opportunity,” said analyst F. Drake Johnstone at Davenport & Co. in Richmond, Va. “But I’m not sure that anyone would have made much of a difference in that company. Finding a CEO position in a growth company may be preferable to presiding over a sinking ship.”
AT&T; is struggling to gain a foothold in local telephone markets as regional Baby Bell companies pick off long-distance customers. Analyst Patrick Comack at Guzman & Co. in Miami said Dorman and Bernard ably managed the company through the downturn.
“I think people thought the business would decline more,” Comack said. “Shrinkage is an industry phenomenon; it’s not AT&T;’s fault.”
For Hannigan, moving from a growing travel business with $2 billion in revenue to a company with declining sales and customers presents the opportunity to rebuild a storied name in business.
“You don’t have to be in the industry a day to know what the gold standard is,” he said. Despite a host of intractable problems facing AT&T;, “I’ll bet on us anytime.”
Dorman said he asked Hannigan about his interest in taking the post three weeks ago. Hannigan had worked with Dorman for 10 years at Sprint Corp. and also at PacBell and SBC, California’s largest local phone service provider.
Hannigan left the telecom industry in 1999 for Sabre.
Bernard, who worked her way up through AT&T; for 18 years before joining a Baby Bell company eventually acquired by Qwest Communications International Inc., rejoined AT&T; in March 2001 as president of the consumer division.
She moved up to president of the business division last year, when Dorman promoted her to corporate president as well.
Officially, Bernard will retire with 26 years at the company and the Bell system, which AT&T; recognizes for its retirement plan.
AT&T; shares fell 8 cents to $20.27 on the New York Stock Exchange.
