A.T.&T.'s New Boss

A.T. & T., the top-ranked U.S. corporation, has assets of $32.8 billion and is as conservative in management practices as it is about money matters. Promotions are made within the pecking order, and Mother Bell rarely detours from the regular line of succession to fill an executive-suite vacancy in the headquarters at Manhattan's 195 Broadway. Thus it was hardly a surprise when A.T. & T. directors last week picked President H. I. (for Haakon Ingolf) Romnes, 59, to replace Chairman and Chief Executive Frederick R. Kappel (TIME cover, May 29, 1964), who reaches the mandatory retirement age of 65 next month.

Tough to Follow. Romnes noted that Kappel will be "a tough act to follow," and there was little argument about that. In the ten years that the outgoing chairman held one of the world's most prestigious corporate posts, A.T. & T. added 30 million telephones, $17 billion in assets, and 3,000,000 shareholders--twice as many as it had when he came into the job. But if company-wide experience is a criterion, A.T. & T. has made another wise choice.

An electrical-engineering graduate of the University of Wisconsin ('28), Romnes climbed poles as a lineman in summer to earn tuition, began full-time work after graduation as a Bell Laboratories researcher, still holds six patents for his work on telephone circuits. He later went to the Long Lines Department, dealt with local problems as chief engineer for Illinois Bell Telephone, got manufacturing experience as president of Western Electric, and learned finance and administration as a vice president, vice chairman and finally president of the parent company.

The oldest of five children of Norwegian immigrants who settled in Stoughton, Wis., Romnes is so soft-spoken and persuasive an executive that colleagues sometimes refer to him as "the Mild Viking." But the Viking has a firm hand when necessary, and he may need it as he steers A.T. & T. through some rough sailing. Through 23 subsidiary companies, A.T. & T. controls 85% of all U.S. telephone communications, most long-distance operations, and an increasing share of the fast-growing data-transmission business. It remains a private monopoly largely because of rate accommodations with the Federal Communications Commission and with a bewilder ing variety of state and local regulatory agencies. The FCC is currently engaged in its closest scrutiny yet of A.T. & T. operations. One principal issue is A.T. & T.'s fixed rate of return on investment.

The company, which now spends at least $4 billion annually to provide new services and improve technology, has always raised the bulk of its money through sale of stock, got less than 35% of it from the long-term money market v. 50% for other utilities. A.T. & T. is gradually raising its debt ratio, is being goaded to borrow even more by critics who point out that the interest on debts would be less expensive than dividends paid to stockholders. The FCC, in upholding the 8% rate of return that A.T. & T. insists on, could conceivably, for the first time, demand a voice in regulating the company's capital commitments.

Firm Talk. Outgoing Chairman Kappel liked to boast that "I am a private-enterpriser from my hat to my socks." Romnes seems to be dressed the same way. A.T. & T., he says, is firmly against any drastic action by the FCC. "We hope we will not be screened from using our management judgment in financing matters. I'd hate to have any regulatory group tell us how we must finance." For a mild Viking, that was firm talk.

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