Corporations: Mother Bell's Christmas Present

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Though A.T. & T. means telephones, Mother Bell nowadays has many children. A.T. & T.'s Western Electric subsidiary last year did $470 million worth of business with the Pentagon, is the eighth largest defense contractor. It is prime contractor on the Nike series of antiaircraft and antimissile missiles, figured heavily in constructing the ballistic-missile early-warning system, built the communication network for Project Mercury and the National Aeronautics and Space Administration's system to direct satellites into orbit. Bell Labs, which discovered the transistor, developed the Telstar communication satellite.

Princess in the Bedroom. A.T. & T.'s main effort, however, still goes into telephones. Of the world's 150 million telephones, more than half are in the U.S.; and Bell, with 68 million phones (up from 60 million five years ago), has 82% of the U.S. phones. The company's intensive $55 million advertising program has induced Americans to telephone instead of write, to install 24 million extension phones, 20.3 million colored sets, and 2.8 million Princess phones for the bedroom—all at a rewarding extra charge.

The company sells two-way dial phones for cars, air-to-ground phones for airplanes, Data-Phones so computers can exchange information with each other; now it is beginning to market push-button phones to replace the dial. Looking to even more sophisticated telephone service, Bell is installing in Succasunna, N.J., a new electronic switching system that will 1) enable subscribers to use their home ex tensions as intercoms; 2) program each subscriber's most frequently called numbers so that they can be reached by dialing just two digits; 3) make it possible to leave word electronically where subscribers will be when they go out, and have calls switched to them automatically.

From Holes Up. The man who runs the world's largest company is the personification of all the steady, efficient, hard-working qualities that make up A.T. & T. Born in Albert Lea, Minn., Kappel (rhymes with chapel) started digging holes for telephone poles in 1924, reached the top spot 32 years later. He is a demanding boss, with a deep sense of responsibility toward the "widows and orphans" who own shares of his company. He split the stock once before, in 1959 (three for one)—a move that helped turn stolid Mother Bell into practically a glamour girl in the eyes of many Wall Streeters. Under Kappel, A.T. & T. became the first corporation to budget more than $2 billion for expansion in a single year, and it has set new spending records ever since.

A.T. & T.'s earnings have been climbing at a 7%-a-year rate—faster than the U.S. economy as a whole. But Kappel obviously expects this rate to speed up next year. A.T. & T.'s invariable practice is to pay out 62% of its earnings in dividends, and the company will have to step up its profits to match the new dividend increase. The hike will mean a $1 billion largesse to stockholders next year, $125 million more than this year.