It had all the markings of a kidnap wedding. The prospective bride was taken against her will. The courtship was marked by protestations and outrage-and the chances seemed slim that it would be a marriage built on respect. But last week, amid smiles and good wishes, American Telephone & Telegraph tied the knot with NCR Corp. and vowed to live amicably together. Clasping hands and smiling, AT&T chairman Robert E. Allen, NCR chairman Charles E. Exley and NCR president Gilbert P. Williamson announced that the communications giant would buy the computer and business-technology company for $7.4 billion in stock.
The grip-and-grin ceremony marked the end of AT&T’s five-month effort to acquire NCR. The battle began last December when AT&T approached NCR management with a stock swap worth $90 per share, which Exley curtly rejected. AT&T tried again, offering shareholders $90 per share in cash, and later $100 per share, if NCR would drop its objections to the deal. Talks broke down in March and then resumed in late April, when AT&T said it was willing to raise its bid to $110. Under the agreement signed last week, AT&T gets one of the few genuinely healthy American computer firms. NCR has had success with the UNIX operating system that runs high-end PCs and workstations and is considered crucial to computing’s future. “We’ll see a few companies in the world able to tie into global computer networks,” says Robert Kavner, head of AT&T’s Data Systems Group. “We intend to be one of them.”
Still, just why the telephone company is buying a computer firm puzzles some analysts. AT&T’s troubled computer unit has not turned a profit since its first PCs appeared in 1984. Moreover, analysts say mergers of high-technology companies have rarely been successful. “Companies merge believing that they’ll turn into IBM just by being large,” says Esther Dyson, a computer-industry analyst. “But it just ain’t so.” Many experts wonder just how well the companies’ two distinct corporate cultures will blend. (AT&T is an East Coast company; folksier NCR is Ohio-based.) While NCR has said that it hopes to promote bonding between the two groups, questions have surfaced about whether AT&T would simply seize day-today control of NCR’s computer operations. AT&T officials have been quick to insist otherwise. “It is a very intoxicating thought that we bought a company for $7.4 billion and [could] tell it what to do,” says Kavner. “We haven’t done that. Instead we’ve said it will remain intact and we’ll delicately incorporate our computer business into it.”
What kind of new offspring could the union of computers and communications spawn? The possibilities include teller machines that use voice recognition rather than a card, computers that understand speech, and credit-card-size devices that would store personal data. AT&T has even discussed video catalogs and a home terminal that would allow customers to order from the local supermarket on their computers. Shoppers would drive down the aisles on their screens, make selections, call stores and pay over the phone, all from the privacy of their living rooms. But it could be a while before the newly merged AT&T and NCR think about starting a new family of products. Given their tempestuous beginnings, they may first have to learn to love each other.
