For all of us lovers of commerce, the removal of AT&T from the Dow Industrial Average of 30 top US corporations was a surprise. Its replacement with Apple, a major tech modern corporation is less of a surprise. It is only hoped that being put in the DJIA a does not have the same effect on Apple that it had on Intel and Microsoft which after they were put in the Dow lost their vigor.
What is disturbing to me, although I do not take issue with additions and subtractions to the Dow, is that AT&T is one of the most fascinating companies in American commerce.
AT&T was designed by its founding CEO, Theodore Vail, to be a government regulated monopoly. It was his clear understanding that a regulated monopoly was precisely the best form of long corporate life because the monopoly regulated the government and the government protected the monopoly status.
There've always been tiny telephone companies around the country but they have been irrelevant. The regulated monopoly guaranteed AT&T a steady profit and its role as captain of commerce for over 100 years. It entered the Dow Jones in 1916.
AT&T has been a marvel of reinvention. In the late 1980s, thanks to a favorable court ruling for MCI, a competitor, AT&T was forced to break up into regional telephone companies.
In California, Pacific Telephone became an innovator itself. The Texas successor to AT&T bought the part of Pacific Telephone that was not in the portable telephone business. The Pacific portable phone business had the wrong technology and was a failure. The the new cell phone business that went to Texas succeeded using a different technology.
The Texas telephone company promptly grew and became a buyer of nearly all the rest of the previously spun off telephone company's. Texas T&T (Southwest Bell) became the new giant AT&T.
What is striking to me is that no single person can be credited with this brilliant corporate maneuvering. From break-up to new giant it became dominant in smartphones and Internet services.
In the case of Citibank, that created a giant financial corporation, we can identify one person who was the genius, Sandy Weill. In the case of IBM we can identify the man who was the genius in helping the company survive the end of giant computers, it was Lou Gerstner.
There have been other great corporate survival stories. General Electric, Bank of America, IT&T, AIG and even Ford Motor Company. What is amazing is these great corporate transitions are different. No single person did it. They are a tribute to modern management that has made this type of survival possible.