Can CEO John Stankey Save AT&T?: Jeff Kagan

Jeff Kagan  |

Image: CEO John Stankey. Source: AT&T

Some good and bad news broke about AT&T recently. New CEO John Stankey says he is not satisfied with the company brand. The bad part is that the AT&T brand, which used to be among the best known and most powerful in the world, has been diluted and confused during the last decade. The good part is Stankey knows about this serious and growing problem. The next question is, can he fix it?

One of the most important jobs Stankey has is to rebuild the corporate brand, invigorating the AT&T stock price and bringing its image back to its glory.

I have been talking about this over the last decade. The origin of this problem comes from simply trying to create value for the investor.

You see, the investor is only interested in making money. If company growth is not strong enough, a company risks losing investors. The investor will simply move to another company for growth and to make money.

As the Godfather says, this is nothing personal. It’s strictly business.

CEO needs to be focused on company growth to keep investors happy

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This is what every CEO needs to be focused on. That’s why public companies always seem to be focused on changing and expanding. That’s where AT&T went off track during the last decade trying to get into pay TV, movies, entertainment, news and more.

The company moved too far beyond its core.

After John Stankey recently took over as CEO of AT&T, he started to make some very bold moves like spinning off DirecTV, Warner Media which included Warner Brothers, CNN and more.

After the dust settles, AT&T will once again be a more singularly focused wireless, telephone and Internet provider for the business and consumer marketplace.

Re-branded AT&T focuses on wireless, telecom, Internet

That’s a great start, but there is much more that needs to be done in order to reengage the company into growth moving forward.

This was always its core, but during the last decade it went way off course. Now, perhaps, it is getting back on track.

It looks like that’s what Stankey is trying to do.

If we look back almost twenty years, Ed Whitacre was CEO of Baby Bell SBC. It was the smallest of the seven Baby Bells, but Whitacre acquired AT&T, BellSouth and Cingular, naming the new and very large company AT&T.

This was a home run. AT&T was larger and more powerful than ever and was equal with Verizon in the marketplace.

Forbes named AT&T Company of the Year in 2006

In fact, Forbes named AT&T its Company of the Year for 2006. Then, after a very successful 17-year run as AT&T Chairman, CEO and President, Ed Whitacre retired in 2007.

The company was huge and very different. It took several years to continue to work to make all the parts work well together.

The industry also continued its growth and change, and AT&T stayed as one of the top two leaders in the industry. Then the iPhone and Android were launched, starting another enormous growth wave in the wireless sector.

AT&T continued to grow along with the industry

Randall Stephenson was the next AT&T CEO. After several terrific years of successfully growing the company along with the industry, he was looking ahead to see where growth would come from over the next decade and beyond.

Comcast was moving into news and entertainment, so why shouldn’t AT&T?

Comcast had acquired NBC Universal, and that became the focus of Stephenson. He eventually acquired DirecTV, then Time Warner which became WarnerMedia. That company owned Warner Brothers, CNN and so much more.

At the time, these bold moves made it look like both Comcast and AT&T were heading in the same direction and would be the largest two players in this newly expanded space.

This went against the grain, and it was not the path I thought they should take, but they were committed. If Comcast was successful, maybe AT&T could be as well.

Fast forward, and while Comcast NBC Universal continues to hum along, the AT&T growth track was derailed.

AT&T's problem is investment in TV, movies that didn’t work

The problem here is AT&T has such a large investment in this ill-fated transformation that it currently finds it difficult to continue doing business as usual.

I think this problem will ultimately go away, but the foreseeable future is what AT&T must deal with today.

Today, AT&T finds itself forced to make many unfortunate changes in its business-as-usual patterns. Rather than making cuts with a scalpel, the company is using a chain saw and clear cutting.

AT&T cutting with chain saw, not scalpel, will hurt brand long-term

Bottom line, these changes are impacting AT&T at a variety of levels, and its stock price is suffering. Unless it starts using a scalpel instead of a chain saw, its problems will only continue and accelerate.

One of the most important things AT&T must focus on is rebuilding its severely damaged brand. This can be done, but it will take time, effort and money.

This is one of the most important things AT&T can and should focus on in order for recovery to begin.

Let me give you an example. T-Mobile was a company in crisis nearly a decade ago. It missed the move from 2G to 3G and couldn’t figure out what was going wrong.

Its brand was in the toilet, and it seemed nobody wanted to be a T-Mobile customer or investor.

How John Legere saved T-Mobile

Then under new CEO John Legere, the company started a long-term transformation. No, the company did not transform into a winner overnight. It took billions of dollars and several years, but it did happen.

In fact, he changed the perception of the company instantly. It just took time for reality to catch up, which it eventually did.

You see, Legere simply and quickly transformed the attitude of the company. Suddenly, he was talking as though T-Mobile was a rapidly growing, top competitor with no problems.

While this was not true in the early years, this focus and commitment was key to transforming T-Mobile into a success story of today.

Can CEO John Stankey transform AT&T back into a leader?

Legere proved to be brilliant in his T-Mobile transformation.

And this is the lesson that John Stankey can use to transform AT&T from the troubled company it is today, into the leader it can become. The leader it used to be.

It can be done, if Stankey understands what must happen next. The next question is, does he understand?

Stankey knows the AT&T brand has been damaged and needs to be rebuilt from the ground up. He also knows the stock price is lower than it should be, and it will take time to recover.

Can CEO John Stankey rebuild the AT&T brand?

Following the Legere model, Stankey can instantly transform the company back into a leadership position if he has the vision and the guts to do so. And if the Board of Directors will go along with him.  

I believe he can save AT&T, shine it up again and transform it into an industry leader once again.

The only question is, will he? Will he be successful? So, let’s see what happens with AT&T, its brand, its stock price, and most of all, its perception in the marketplace. 

 

Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, TeleHealth, Healthcare, Automotive, Self-Driving cars and more. Email him at jeff@jeffKAGAN.com. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and on LinkedIn at www.linkedin.com/in/jeff-kagan/.

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Equities News Columnist: Jeff Kagan

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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