BusinessWeek: NEWS ANALYSIS: Mike Armstrong's Last Stand.

Business Editors/High Tech Writers

NEW YORK--(BUSINESS WIRE)--May 24, 2001

Can AT&T's CEO untangle the telecom's assets and reconnect with

investors?

Interviews with more than a dozen AT&T insiders and 30 outsiders show that Armstrong is making progress in creating more valuable enterprises out of the wreckage that AT&T had become. Armstrong has raised billions of dollars to finance the company during its transition. And he has made progress in shoring up morale, with both pep talks and cash. In a development not yet made public, Armstrong persuaded his board to issue a special batch of new options for as many as 56,000 eligible employees. What's more, AT&T's operations are providing some cause for hope. AT&T Wireless Group is expected to report a 35% rise in revenues last year, to 0.4 billion, about seven percentage points more than the industry's average growth. J.P. Morgan Chase telecom analyst Marc B. Crossman estimates that with the tailwind of selling Internet access and cable telephony, the unit's revenue growth will accelerate to 16% this year. And BusinessWeek has learned that significant cost cuts are planned to boost the unit's profitability. AT&T Broadband could eliminate up to 2,000 positions, out of 53,000, over the next 12 months, people familiar with the matter say.