Commentary on a slow death

[tw]

commentary from Loring Wirbel in EE Times
Al Lewis, business columist for the Denver Post, pointed out an unanticipated consequence of the Cingular and Vodaphone bidding war for AT&T Wireless: the death of AT&T as a viable brand. With its wireless assets now melded into Cingular and AT&T Broadband as a vanished element within Comcast, then only thing left bearing the hatched goble logo is a boring circuit-switched long-haul network.

Cynics might says the time division mutlitple access patchwork of AT&T wireless had become so synonymous with "dropped call" that it gave AT&T reverse-brand equity. Agreed. But when a mighty brand is chopped up bit by bit, it's depressing to see even a crippled player vanish.

We in hardware engineering have seen this before. The Western Electric side of AT&T had fans, but Lucent Technologies was a power house for a few years. The conversion of microelectronics assets from Lucent to Agere helped the semiconductor company ... Meanwhile, through, Lucent loses its enterprise play through the creation of Avaya; has to augment its routing talents with Juniper deals; and the AT&T roots of the entire operation are lost to antiquity.

The Economist claimed that no time in the history of free world business was shareholder value more destroyed when AT&T owned and then spun off NCR. AT&T, like all MBA dominated companies, uses acquisitions and spin offs to mask the massive sucking sound. AT&T has negative growth; leaches on others to claim profits that are really finance games.

We discussed circuit switch technology some many years ago when xDSL was the obvious future AND still not available some 15+ years after proven by British Telephone. Back when Al Gore was giving his information superhighway speech; Robert Allen did not have a clue that a politician had better knowledge of the business than its chief MBA. Back then UT had finished with his time in pond.com. Back then, the long term future was to supplement and then replace all those expensive circuit switched exchanges with packet switched technology. To replace ISPs with a server in each home connected by xDSL and other broadband technologies. Back then, baby bells were resisting such technology due to a 20 year spending spree on new circuit switched swithes. Fear of pioneering new technology is why the 1996 Communicatons Act was created. All of which said circuit-switch technology is too limited (in the switch; not in the wires); too expensive; too obsolete.

Well now we have AT&T - once was the proud owner of Bell Labs, microelectronic manufacturing, Western Electric, largest installer of underwater transcontinental cables, purchased the premier company in wireless communication (McCaw Celluar), and owned NCR so that they could compete in the computer business against IBM. But AT&T was dominated by MBAs. And so these MBAs continued with failed venture after failed venture; all the while selling off assets to mask massive losses.

Worst service both in customer service and in dropped calls was obsolete technology time division switched AT&T Wireless. AT&T Broadband so feared packet switching as to plan circuit switched technology on the cable system eventually sold to Comcast. Comcast now uses packet switch for just too obvious reasons. Bell Lab basic research was stifled in favor of product development research. Basic concepts of how to perform research perverted by MBA short term thinking that removed a separation between basic research and application research. AT&T satellite division lost satellites - one having temporarily knocked PBS and a major commercial TV network off the air. They sold the profitable transcontinential cable business to Tyco - MBAs always need more cash. NCR was a disaster having once been THE cash register everywhere; now NCR is rarely seen. But AT&T sucked that division for money; then spit NCR out.

All that remains is obsolete technology circuit switched technology. Those MBAs have so little left to sell off. Those $billion available from the Lucent spinoff are all gone. All that remains is debt. But the MBAs - and the #1 MBA Robert Allen - got rich enough - America be damned.

Some of those AT&T people were friends and aquaintences. One summer, they were all talking ISDN as if this was some mysterious force discovered by Einstein. But none had even basic knowledge of how a phone works. They all understood tarrifs. Just none understood anything about the product or what it did. And with many such as Isenberg, of Bell Labs, loudly calling for the internet as a future, then one would think these AT&T people would at least know something about Internet ( www.isen.com/stupid.html ). They knew the Internet only as part of AT&T e-mail. Without dirt under their fingernails, then they were perfect management material for AT&T. AT&T joins Xerox, First Energy, and Motorola as classic examples of what happens when the MBA takes control of a company.

[Pie]

I would argue that the real demise of Lucent was caused not by the telecom implosion, but by bad financials managed by those self-same MBAs. The real sin was in the debt position the company took.

Technology companies can't survive with debt. They were still thinking in fuzzy-headed utility company mode. There was no need for it, either -- if they had floated a few million more stock, they could have cleared it easily. They would have survived the eventual marked meltdown, certainly with layoffs, downsizing and a much reduced stock price, but not needing to sell off and spin off all their core assets.

Well, at least I got a piece of it when it was great. What a ride!

- Pie, Bell Labs alumna

[tw]

Originally posted by Pie
Technology companies can't survive with debt. They were still thinking in fuzzy-headed utility company mode. There was no need for it, either -- if they had floated a few million more stock, they could have cleared it easily.

Even high tech companies survive in debt. But debt is suppose to be due to a need for cash to develop and manufacturer new products. What constantly bothered me even two years after the Lucent spin off - and I even cornered a Lucent saleslady about this - no new or innovative products.

For example, this facility was upgrading its phone system. The only internet computer shared same line with fax. I asked about dedicated lines on that PBX so that a fax or modem could lock onto any available outgoing line - not be interrupted. This even existed in the older Northern Telecom switch. She was confused. Fine. Just include an adapter so that when one was using the line, the other was temporarily locked out (even saw something similar in Radio Shack). She had to ask. Apparently she did not even understand the problem - let alone know the product line. What about a modem adapter plug on some phones so that a computer's modem could use that phone. Nothing. Blank look. She could only sell PBXs - and did not even understand many functions that PBXs could offer.

Now maybe it was just her and my other Lucent sources. But two years after the spinoff - and Lucent still had no 'exciting' products - but had the debt that is suppose to occur only with those breathtaking products.

[SteveDallas]

Originally posted by Pie
I would argue that the real demise of Lucent was caused not by the telecom implosion, but by bad financials managed by those self-same MBAs. The real sin was in the debt position the company took.

I read that one source of Lucent's financial problems (among many, apparently) was that they made sales by financing the equipment, and made poor judgements about how much financing they offered and to whom. Many of these borrower/customers went out of business and that caused some trouble for Lucent.

I won't bore you with the stories, but our antiquated PBX system where I work is from Lucent. The product itself is OK (there are several things I don't like about managing it, but these are mostly typical of its vintage), but Lucent's follow-up service was so bad that I'm not even considering them (or Avaya or whatever their name is now) for the replacement.

[xoxoxoBruce]

A friend of mine works at Bell labs/Lucent/Tyco in Texas. He told me that when they made the Bell to Lucent transition, things were pretty good, but in his department alone, they added 7 layers of management between him and his boss. Giant sucking sound.

[mrnoodle]

Until recently, I worked at the company that manufactures boards for Lucent, Avaya, Alcatel, and others. The R&D is lackluster, to say the least. We maybe ran one proto board every 5 months. Of course, they probably had more than one shop doing it, but..

I can tell you one thing, knowing the shitty QA that happens at (company I worked for), I wouldn't run my network on a Lucent or Avaya system. Alcatel is a bit better, but not by much.

Lucent sent some jack-booted thugs to stand over the manufacturing people recently when a customer opened up their spanking new system to find that someone had left a Doritos bag in the package. Lucent pays manufacturers BIG MONEY to operate an ESD-safe, world-class-manufacturing type shop. Finding a bag of chips with the product is.....um.....bad.