AT&T Banks on Tech Chief for Automation Boon
AT&T (T) - Get Report says technology will lift the company out of the industry's tailspin, and it has placed a huge bet on one man -- Hossein Eslambolchi -- to do it.
At the company's analysts day Wednesday in New York, CEO Dave Dorman introduced his technology chief of three years as a "true visionary." Eslambolchi didn't fail to live up to the billing as he outlined his plan for an all-automated, all-Internet future for Ma Bell.
But Eslambolchi's sweeping designs for the human-free network of tomorrow that delivers all sorts of communications and applications failed to stir investors today who were still looking at a faded giant mired in gloom. AT&T shares rose 24 cents, or 1%, to $20.19 Wednesday.
With rivals such as
MCI
and
Sprint
(FON)
, as well as the entry of the Bells,
Verizon
(VZ) - Get Report
,
SBC
(SBC)
,
BellSouth
(BLS)
and
Qwest
(Q)
into the business services market, the hyper-competition has caused some calling prices to fall below 2 cents a minute in recent bidding wars.
The crowded market and unconvincing economic recovery have accelerated revenue erosion trends across the telecom industry. And instead of leveraging its industry-leading position as rivals imploded, AT&T is more often seen countering low-ball bids to avoid having its customer rolls picked clean, say analysts.
That's why the job of selling a vision of technological resurrection falls so importantly on Eslambolchi.
|
Hossein Eslambolchi |
The 18-year AT&T Labs veteran has claims on some 200 patents. His talent for Internet Protocol innovations helped thrust him to near-celebrity status during the boom when data networking king
Cisco
(CSCO) - Get Report
hired him away to head its optical Internet program.
But his stint at Cisco
lasted less than a month as AT&T dangled more than $5 million in cash to bring him back in January 2001.
According to
Security and Exchange Commission
filings not available until last year, AT&T gave Eslambolchi a $3.8 million "special retention payment," a $900,000 36-month allowance for mortgage payments, $800,000 in cash for a down payment on his California home and a salary raise to $300,000 a year.
AT&T's $5 Million Man |
$3.8m retaining bonus |
$300,000 allowance for mortgage payments |
$800,000 for Calif. home downpayment |
Source: Securities and Exchange Commission filings |
Eslambolchi is well-regarded in the industry and has been successful at translating a mishmash of tech jargon into easy accessible notions. He is the author of the copyrighted "concept of one, concept of zero" theme that refers to Internet Protocol as the one underlying network technology, and full automation that requires zero customer service interaction (or something to that effect).
His simplification efforts would basically give users the ability to purchase and manage various services online, as banking customers or investors do now with their accounts.
"AT&T promises a very elegant solution, but some carriers already offer the same sort of thing, only in a slightly cruder fashion," says Forrester analyst Lisa Pierce.
And some observers question the logic of lavishing lots of money on one man's brainpower as the company has jettisoned so much value in its glorious slide. Since Eslambolchi's repatriation, AT&T has killed @Home, the cable modem service he was assigned to fix, spun off its wireless division and sold its cable unit to
Comcast
(CMCSA) - Get Report
in an attempt to right its core phone business.
"I think that's a disgrace for a company in this position," said one New York money manager who was shocked to hear of Eslambolchi's windfall.
Eslambolchi wasn't available for comment. But an AT&T representative defended the company's move, calling Eslambolchi one of the world's most talented technologists. "AT&T is lucky to have him," said the rep.
Eslambolchi will help save AT&T millions in the conversion of labor-intensive processes to automation, according to the rep. "If we are going to be a technology company, we have to invest in the best technologists in the business."
Reuters
reported Wednesday that the telecom giant said it plans to cut 4,600 jobs, or 8% of its workforce -- a move that will save the company about $400 million in 2004.
But some observers question if even the best technology can save AT&T from its blood-draining business.