AT&T and NCR: a Merger That's Working
The challenge is for the two businesses to stay focused while gaining from having larger shared resources
MARRIAGES of the corporate kind do not excite poets. But the one between AT&T and NCR deserves some kind of paean. In a high-tech world where most mergers flop, this one has worked.Skip to next paragraph
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AT&T and NCR are beginning to show how communications and computers can live - and even thrive - under one roof. The experience gained here will prove valuable as AT&T moves to merge McCaw Cellular into its corporate fold. Maybe synergy - the buzzword that soured along with so many highly touted ``synergistic'' partnerships - can work after all. Some analysts say that AT&T-NCR can redefine the telecommunications and computing industries.
``Our call for the early leader in this stuff is AT&T,'' says Neal Hill, a senior analyst at Forrester Research Inc. in Cambridge, Mass. ``They have all the pieces in rudimentary form.'' The challenge is to connect them. Building on NCR's past
Dayton, Ohio, is a modest Midwestern town that invented cash registers, not computers. Ever since John H. Patterson founded National Cash Register in 1884, the company has stuck to those roots: financial transactions. NCR began to computerize its products in the 1960s when it became clear that electronics was the wave of the future. Buy a candy bar or a pair of pants today and chances are an NCR terminal likely handled the transaction. Withdraw money from an automated teller machine (ATM) and it is possible that NCR made the machine.
It is this computer niche - the know-how of capturing and transmitting financial transactions - that attracted AT&T Chairman Bob Allen to bid for the company nearly three years ago.
It was a tempestuous courtship. NCR chairman Charles Exley Jr. fought the takeover and only relented when AT&T upped its bid. Yet by most accounts, the merger has been smooth due to several factors. ``A lot of things people did in the '80s proved that financial synergy didn't work very well,'' says Philip Neches, NCR's chief scientist. The classic example was the combination of Sperry and Burroughs in 1986 to form Unisys Corporation. For several years the company tried to market both of its incompatible computer lines, with disastrous consequences.
NCR and AT&T did not have that problem. They were using the same version of a computer operating software known as Unix. Both were committed to open systems where machines from different manufacturers can interoperate. And both had begun to emphasize Intel computer chips over rival architectures.
Another reason for the merger's success was the quickness with which the two companies came up with a plan. Two days after the merger was announced, Dr. Neches and Bill O'Shea of AT&T formed a team to combine the pieces and products. In just 16 days, they had a plan. What made the planning easy, Neches says, is what he calls the two companies' ``strong value-based guidelines that made a lot of the decisions straightforward.''
For example, the two companies carefully planned the human side of the equation. Employees of AT&T's computer unit were given a choice of finding a new position within AT&T or transferring to NCR. If they decided to transfer, NCR actively ``recruited'' them.