January 31, 2005 2:38 PM PST

AT&T chief lands another SBC merger

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AT&T Chief Executive Dave Dorman knows what it takes to get a merger done with SBC Communications--after all, he's done it twice now.

Dorman, whose company is being bought for $16 billion by SBC, also previously played a supporting role in getting Pacific Telesis sold to SBC in 1997. At the time, Dorman was a young mover and shaker at Pacific Telesis, where he served as chief executive at one of its local telephone companies, Pacific Bell.

"He was a rising star at (Pacific Telesis) and regarded well," recalled one executive who was familiar with both transactions, noting that Dorman and Edward Whitacre Jr., now-CEO of SBC, were colleagues. Dorman "knew Ed personally, and that chemistry probably helped in the AT&T deal."

Whitacre was in charge of the Southwestern Baby Bell back in 1997, when Pacific Telesis and SBC closed their $16.5 billion merger. Dorman also played a role--albeit a smaller one--in that merger, conducting due diligence on the transaction, the source said.

The rise for Dorman--who was not available to comment for this story--has been a quick ascent up the telecommunications pipeline, which began in 1981, when he joined long-distance carrier Sprint. He served nearly a decade at the carrier, rising to president of Sprint Business, before jumping over to Pacific Telesis in 1994, where he served as CEO of Pacific Bell at age 39--making him the youngest executive to head a Baby Bell.

After the Pacific Telesis merger with SBC, Dorman became an executive vice president at SBC, overseeing its strategic planning, long-distance and Internet businesses. But given that Whitacre, who was in his mid-50s at the time, was not likely to retire anytime soon, Dorman resigned to take the CEO seat at PointCast, once a high-flying Internet push-technology company.

"I think Dave got impatient. He knew Ed wasn't going to retire anytime soon, and he wanted the top job somewhere," the source said.

But after struggling to retool the humbled PointCast to take it public, and finding that the road to great wealth did not lie in the dot-com arena, Dorman re-entered the telecom world.

He joined Concert, a business phone service provider and joint venture of AT&T and British Telecommunications, in 1999. Though that effort failed to catch fire, AT&T Chief Executive Michael Armstrong brought Dorman into his corporate headquarters as president in late 2000.

Dorman joined Ma Bell at a time when the 130-year-old telecom company was undergoing a great struggle. Armstrong, in an effort to turn things around, launched a game plan to break the company into four pieces in 2000.

But that failed and Armstrong's tenure with the company ended, with Dorman finding himself promoted to the CEO post in 2002. In the end, Dorman was not able to reverse the company's fortunes, as well, analysts said.

"Dorman is a good operations guy, but unfortunately he came into a business that, due to regulatory challenges, had seen its best years behind it," said Rick Black, an analyst with Blaylock & Partners. "He's been trying to manage a business with declining revenues and increasing competition."

While he remains CEO of Ma Bell for now, his title is expected to change to SBC president once the acquisition closes next year. Dorman, 51, will be reporting to Whitacre, 63, who is expected to retire in the next two years.

"Dorman is up for the role of SBC CEO, but there are other people within the organization who may also be in line," Black said. "It's not a given that Dorman will be given the position. We'll have to wait and see."

An AT&T spokesman agreed that there is no prearranged deal for Dorman to succeed Whitacre when he retires. He said Dorman will remain focused on running AT&T until the merger closes and then serving as president of SBC.

"What happens next remains to be seen," the spokesman said said.

 

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