AT&T chief chafes at charges of $100 billion mistake

At the time of his decision to push Ma Bell into the cable TV business as a way to develop an in-house local phone network, Armstrong was hailed by many in the industry as a visionary thinker who pulled a stultifying giant back from the brink of irrelevance.

But now, just four months after the close of his last major cable merger, Armstrong is ready to split up the businesses. That's turned an unwelcome spotlight on Armstrong himself and on whether his vision has turned out to be so much vapor and hype.

In the course of a few testy moments on Wednesday's conference call, Armstrong did his best to refute this notion, saying that the spinoffs were simply a controlled evolution of the corporate strategy.

"It seems to be a lot of fun to write that this is a repudiation of our strategy," said Armstrong, who took AT&T's helm in late 1997. "I find that not only wrong, but offensive."

Ma Bell's chief compared the move to his time as the chief of Hughes Electronics, where he led the cold-war giant through a period of restructuring as the defense industry contracted and searched for new ways to make money. AT&T also is at a period in which shifts in the market force a certain amount of flexibility, he said.

But that doesn't mean that a continual transformation of the company means failure, he stressed.

"To suggest that this phase of transformation is a repudiation, I just don't buy into," Armstrong said.

Few outsiders appear to be accepting Armstrong's all-part-of-the-plan rhetoric, however.

"In fact, nothing could be farther from the truth," said Jilami Zeribi, a telecommunications analyst with Current Analysis. "It's no secret that these guys have been banging their heads against the wall for months."

It may be too early to tell whether Armstong's risky cable buys will bear fruit for Ma Bell and its shareholders. The company's history of spinning off companies has usually served shareholders well, creating strong new competitors in new markets. And if the four companies can work together under the same brand, they may be able to salvage some of the "synergies" that Armstrong talked so fondly about beginning two years ago.

But whatever happens, it appears that AT&T will always be known as the house that C. Michael built--and then quickly took apart.