NATION/WORLD
Thursday, September 21.1995
UNIVERSITY DAILY KANSAN
5A
Corporate split dismantles AT&T
The Associated Press
NEW YORK — In a stunning turn for one of the nation's best known companies, AT&T Corp. will split into three companies, jumping out of the personal computer business while remaining the largest provider of long distance service.
The action, approved by AT&T's board at a meeting Wednesday morning, is the biggest voluntary corporate breakup, eclipsed only by the government-ordered dismantling of AT&T that was arranged in 1982 and took effect in 1984.
It will give AT&T greater flexibility to make future acquisitions, freeing the separated units of financial and regulatory pressures that inhibited the company in the past.
The three new companies will be publicly traded and turned over to AT&T shareholders. AT&T said 8,500 jobs would be lost from its computer business, but didn't say how many jobs would be cut from its overall payroll of 303,000 employees.
Each of the new businesses would focus on three areas of specialty — communications services, communications equipment manufacturing and computing. The communications services business, which includes long distance, will retain the AT&T name. Names for the others have not been decided.
"Changes in customer needs, technology and public policy are radically transforming our industry," AT&T Chairman Robert E. Allen said after the company's board meeting.
One analyst praised the move.
"I think it makes a lot of sense. I think it's stunning to people on the outside. No one
believed Bob Allen and his senior executives would do something this bold and this quickly," said James Moore, president of Geopartners, a technology consulting firm in Cambridge, Mass.
Based on the company's 1994 revenue of $75 billion, the breakup is larger than the 1984 breakup, which settled a government antitrust lawsuit. AT&T had revenue of $58 billion in 1981, the year before the settlement, and employed more than 1 million people.
But in terms of assets, AT&T today has about $80 billion compared to $138 billion in 1981, when it was the Bell system monopoly.
Today's action by AT&T comes at a time when it appeared to rebuilding itself. With a telecommunications reform bill in Congress, competition appears likely to develop in local phone service and AT&T has plans to jump back into that market.
AT&T said its telephone business, credit card company and wireless communications operation — formerly McCaw Cellular Communications, will remain one business under the AT&T name. The operations had revenue of nearly $50 billion last year.
Another company will be formed from AT&T's phone equipment, network equipment and computer chip operations, which have sales of around $20 billion.
The third company will be AT&T's Global Information Solutions, the former NCR Corp., which it bought in 1991. It had sales of around $5 billion last year. It will continue making midsize and large computers but will stop making personal computers.
Simpson team suffers setbacks
Judge refuses to allow FBI scientist's testimony
The Associated Press
LOS ANGELES — Judge Lance Ito barred O.J. Simpson's defense yesterday from calling an FBI scientist who has criticized members of the agency's crime lab, including an expert who gave damaging testimony against Simpson.
Dealing the defense a severe blow at the end of its case, Ito also said FBI Agent Roger Martz can't be forced to face allegations from the scientist that Martz slanted reports against defendants in other cases and committed wrongdoing in the Simpson case.
Ito cited in a written ruling the toll such testimony would take on the beleaguered jury, which has been sequestered since Jan. 11.
The presentation of additional, complex scientific testimony on a collateral issue would only serve to aggravate and confuse the sequestered jury," Ito wrote.
The defense lost Martz the day after it successfully called two mob informants to testify that Detective Philip Vannatter told them Simpson was always a suspect in the murders.
The testimony was used in an attempt to bolster the defense frame-up theory: Police planted Simpson's preservative-laced blood on the crime scene. The defense is trying to show that Vannater was one of many who, in a rush to judgment, initially assumed Simpson was the killer and later lied to cover their motives for a warrantless search of his estate.
The Flatos testified in a courtroom blocked out to TV and audio coverage to protect their safety. TV audiences missed two of the trial's most memorable witnesses.
Under questioning by defense attorney Robert Shapiro, Larry Flato recalled a January meeting with Vannatter, his partner, a deputy district attorney and Craig Flato at a hotel room. The Flatos, who are from Boston, were in Los Angeles to testify in a mob murder trial.
Larry Flato said Vannatter mentioned the day he first went to Simpson's estate to investigate the June 12, 1994, murders of Nicole Brown Simpson and Ronald Goldman.
"What did he tell you?" Shapiro asked.
"It was something to the effect that he went over there as Mr. Simpson was a suspect," Flato said.
A month later, Plato said, Vannatter made a similar statement.
"There's no doubt in my mind he said that," Flato said.
Craig Flato at first denied that he heard Vannatter say anything. But confronted with his own transcribed statements to the district attorney's office, he told jurors, "I heard Detective Vannatter saying, 'The husband is always the suspect.'"
The brothers' accounts were corroborated by an FBI agent who said he heard the same statements.
Hours earlier, Vannatter took the stand and again denied that he considered Simpson a suspect at the outset.
Vannatter conceded that he spoke with the Flatos, adding: "If something was taken out of context, if something was said in jest, I can't answer to that."
Besides hurting the defense, today's ruling ended FBI Agent Whitehurst's brief but intense moment in the Simpson trial spotlight. The agent, formerly a bomb specialist, told reporters he now would return to the FBI lab and resume his training in paint analysis.
House, Senate to negotiate welfare overhaul
"I'll go back to Washington, sit at my desk and look at paint chines." Whitehurst said.
"I have no choice but to do what I'm doing," he said. "If I see misconduct, I'm under direct orders from the director of the FBI to report that."
But Whitehurst said he would continue his efforts to expose what he called problems at the FBLab.
The Associated Press
WASHINGTON — Congressional Republicans are optimistic they can send President Clinton a bill this fall that imposes the first-ever time limit on welfare benefits, despite sharp differences between House and Senate versions for overhauling anti-poverty programs.
With solid support from Democrats, the Senate voted 87-12 on Tuesday to dismantle the federal welfare system and end the New Deal guarantee to provide a subsistence income to millions of single mothers and their children.
Eleven Democrats and a single Republican, conservative North Carolina Sen. Laugh Faircloth, voted against the bill.
critic votes as it also agreed to abolish Aid to Families with Dependent Children.
The House passed its version of welfare reform in March, in its whirlwind action on the Republican "Contract With America," and picked up one a handful of Demo-
House and Senate negotiators must resolve the differences between the two bills.
The main sticking points are over child care funding, how much of its own money a state should be required to spend on welfare programs, whether school lunches and foster care programs should be returned to the states as block grants, and aid to unmarried mothers.
On the most fundamental issues, lawmakers say, the House and Senate are in agreement: that welfare recipients should be required to work in increasing numbers, that their checks should end after a maximum of five years, and that legal immigrants should no longer receive public assistance.
Lawmakers from both sides of the Capitol were signaling that they
would write a compromise bill that could be passed on final votes and be signed by Clinton, who campaigned in 1992 on a promise to "end welfare as we know it."
Sen. Rick Santorum, R-Pa., said he was optimistic an agreement could be reached this fall.
"I think we're going to get a welfare bill, period," he said.
But the emotional issue of out-of-wedlock births still divides majority Republicans.
Conservatives are demanding that the legislation follow the House blueprint, with its outright ban on cash assistance to teen-age mothers and restrictions on the additional payments that most women on welfare now receive when they have more children.
Sen. Phil Gramm, R-Texas, on Tuesday threatened to vote against the final bill if Congress refuses to end the "suicidal" practice of "giving people more and more cash benefits
to have more and more children on welfare."
But Democrats and moderate Republicans defeated, by large margins, efforts to strip these families of their welfare benefits.
This alliance of moderates also was instrumental in pouring billions of dollars into child care for single mothers on welfare who would be required to work, and for requiring states to continue to spend some of their own money on welfare programs. Some of them are threatening to withdraw their support for the compromise legislation if it backs away from the Senate's blueprint and slashes aid to single-mother families.
The president is also on their side, saying Tuesday from Jacksonville, Fla., that if Congress gives into "extremist pressure" and walks away from bipartisan common ground, lawmakers will have killed welfare reform.