AT&T ANNOUNCES MERGER TO DEVELOP ON-LINE SERVICES.

Byline: Laurence Zuckerman The New York Times

After struggling unsuccessfully to produce new on-line information services aimed at businesses, AT&T said Monday that it would turn the task over to Jim P. Manzi, the former chief executive of Lotus Development Corp. He had left that company last fall to join Industry.Net, which specializes in matching buyers and sellers of industrial equipment on the Internet.

Manzi agreed to become chairman, president and chief executive of Nets Inc., a company formed by the combination of Industry.Net and AT&T Corp.'s New Media Services unit. AT&T will become a minority owner of the new company, which will be privately held, as Industry.Net now is.

Both companies declined to provide financial details about the deal, but an AT&T spokesman said that AT&T would invest some cash into the company, which begins operations next Monday.

Monday's announcement was the latest in a series of shifts in AT&T's on-line strategy. In January, the company announced that it was abandoning the proprietary service called Interchange, which it had bought from Ziff-Davis for a reported $50 million in 1994, to move to the World Wide Web, which has many more potential customers. Last week, it introduced the Web version of the AT&T Business Network, an on-line service for business people that had little success on Interchange. That service will continue as part of Nets Inc.

AT&T also is trying to sell the Imagination Network, an on-line game service that has proved a failure too.

It still has a unit called AT&T Personal Online Services, which is developing products for consumers.

``AT&T is still looking for a way out of that mess,'' said Gary Arlen, president of Arlen Communications in Bethesda, Md., referring to its on-line efforts. ``They keep stumbling around.''

But John Petrillo, AT&T's executive vice president of strategy and new service innovation, said that Interchange had actually cost less than $50 million and that the company's efforts had provided useful lessons, namely that the company does not want to be in the business of publishing original on-line information.

``You won't find AT&T developing a content business for itself,'' he said. ``That is not our strength.''

Instead, the company has turned to Manzi, who left Lotus three months after it was bought by International Business Machines Corp.

Manzi subsequently invested an undisclosed amount in Industry.Net, which is located in Pittsburgh, and makes money by bringing together about 4,500 suppliers of industrial products with 200,000 prospective buyers. He was named president and chief executive of the company and set up an office near his home in Cambridge, Mass., where Nets Inc. will have its headquarters.

Michael E. Kolowich, president of AT&T New Media Services, will join the company as vice president of business operations. He worked for Manzi at Lotus in the mid-1980s.

Nets Inc. will be licensed to use the AT&T brand name and will establish a sales link with AT&T Worldnet Service, the company's fast-growing Internet access service.

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Photo

Photo: Michael Kolowich, left, of AT&T New Media Services a nd Jim P. Manzi of Industry.Net will work to develop on-line services.

Associated Press