Although the telephone carrier has been a dominant fixture in American business for decades and exerted considerable influence in the high-tech arena, its efforts to participate directly in the computer revolution have mostly sputtered.
AT&T's course has largely been determined by lumbering, bureaucratic inertia, critics say, and it remains to be seen whether a new management team led by new CEO Michael Armstrong can fundamentally alter the company's culture.
"They have a bad history in acquisitions," said Rob Enderle, an analyst with Giga Information Systems. "Their assumptions tend to go awry."
Nor does TCI have an unblemished history. In 1993, TCI chief executive John Malone agreed to merge with Bell Atlantic in a $16.7 billion deal that was hailed as a sign of the long-awaited blending of cable TV and phones. But the deal went awry after the companies ran into philosophical differences and a plan to put a cap on cable prices threatened the economics of the merger.
Net access: Operates ISP WorldNet. Also a partner in Web-based online service with Excite.
Music: Offers delivery technology through a2b Music arm.
Wireless: Acquired McCaw Cellular Communications in mid-'90s. Has a 2.5 percent stake in satellite provider DirecTV.
AT&T's biggest failure, Enderle and others say, was its attempt to sell computers. So-called convergence had been labeled an inevitability by the mid-1980s. To capitalize on that assumed trend, the largest phone company decided to expand into PCs.
By the latter part of the decade, the company cranked up an in-house effort to sell PCs and servers. It quickly failed. Yet rather than exit the market, AT&T subsequently purchased NCR in 1991.
"From that point on, NCR started to crumble," said Roger Kay, computing analyst for International Data Corporation. "The wind got sucked out of their sails instantly."
Beforehand, smallish NCR was a promising computer company, based on a combined Unix and Windows strategy that seemed to make sense at the time. The company also boasted an entrepreneurial management team bent on innovation.
A culture clash soon emerged between NCR and AT&T's more imperious style. At an AT&T briefing around the time of the acquisition, Kay recalled, a high-level AT&T executive told a group of analysts: "Monopoly is good. It is everything the textbooks say it is."
Eventually, NCR's management was mostly replaced. The company began to slip soon afterward.
"On one hand, you have these entrepreneurial guys from the Midwest, and on the other you had these monopolists in New Jersey who liked to play golf," Kay added. "They didn't do anything but throw money into it and lose more money."
Millions were poured into the effort by AT&T until January 1996, when the company announced that it would spin off NCR into a separate company. NCR has rebounded since then, partnering last fall with Sun Microsystems in an effort to popularize the Solaris operating system on Intel-based servers.
While many of AT&T's earlier missteps occurred under the reign of former CEO Robert Allen, it is yet to be seen how successor Armstrong will run the corporate behemoth more efficiently.
"The history is a little harder to extrapolate because they do have a different CEO," said Jeff Matthews, a partner in investment firm RAM Partners. AT&T's stock dropped more than 5 points to close at 60 after the announcement.
Some clashes over personality and vision are inevitable, given the vastly different corporate cultures of the two partners.
AT&T is known as a button-down, centralized corporation, while TCI is more freewheeling. Under its current management, the cable TV giant has decentralized operations.
However, the managers named to lead the new company--AT&T president John Zeglis and TCI president Leo Hindery--share similar management styles. Zeglis, considered a candidate for AT&T's chief executive before Armstrong was selected, joined AT&T in 1984 as corporate vice president and general attorney. He was named general counsel in 1986.
Hindery was elected president of TCI in 1997. He previously was CEO of InterMedia Partners, a cable operator, and before that, was chief officer for planning and finance at Chronicle Publishing in San Francisco.
Malone is considered independent-minded, but he will be stepping down as TCI's chief executive in the buyout. He will still hold a seat on the AT&T board.
"AT&T is very centralized and prone to careful evaluation of options, while TCI more willing to make gambles," said Sean Kaldor, another IDC analyst.
"With resources freed up by the deal, there is the potential for TCI to move more quickly in rolling out interactive services," Kaldor added. "However, they have to execute on plans that are in place, not spend lots of time with AT&T adding new capabilities."
AT&T's most successful high-tech foray was the 1996 creation of Lucent Technologies, the telecommunications and semiconductor company. But observers point out that Lucent was formed essentially from divisions that were spun away from AT&T's orbit.