JUST THREE EASY PIECES

Can a company be just too darned big? Trustbusters and federal judges have often said so. But for the chief executive of a corporate colossus to agree sounds contrary to nature. And for said chief to insist, entirely voluntarily, on busting up his own company into three pieces--well, only last week did the idea change from unheard of to heard of once. In laconic tones, chairman Robert Allen announced at a Manhattan press conference that he had persuaded the AT&T board to break the company into three independent corporations. It will be the biggest corporate split-up ever, as measured by the stock-market value of the splitting company. Not even the court-ordered breakup of AT&T 11 years ago into seven Baby Bell phone companies and one everything-else corporation comes close.

The sheer size of the breakup, and the secrecy in which it had been planned--Wall Street had heard not a whisper of what Allen was up to--would have made the announcement sensational enough. But the timing and reasoning were more surprising still. The breakup runs squarely counter to the most publicized trend in American business: the move toward bigger and bigger mergers, like the one agreed on by Time Warner and Turner Broadcasting two days later.

Moreover, Allen in his understated way was voicing some stunning heresies--stunning for an AT&T head anyway. The company had long been almost synonymous with Big Business, and for more than a century a paragon of vertical integration--the tying together of suppliers and customers into one company. But now Allen calls vertical integration "an idea whose time has passed" and says that "we've reached the point where the advantages of our size will be offset by the time and costs in coordinating and integrating sometimes conflicting business strategies." Translation: the company's parts, notably telephone service and equipment manufacturing, are starting to get in one another's way.

And what of synergy, the idea that different but related businesses can be combined into a whole greater than the sum of the parts? Allen was a big booster in 1991, when he engineered a $7.4 billion hostile takeover of computer-making NCR. But while the marriage of computers and communications might seem a natural, AT&T could never make it work. For the first three quarters of this year, the computer business lost an estimated $500 million.

In hindsight, the price AT&T paid for NCR was too high, and the situation was soon complicated by recession. Says Michael Porter, a professor at Harvard Business School: "Everyone knew at the time NCR was a third- or fourth-rate computer company, but somehow AT&T thought they could put it together and there'd be all this synergy." Charles Exley, who quit as NCR's CEO the day the merger took effect, chose not to crow about the results of Allen's folly. Says Exley, who now sails the world on his yacht: "Perhaps now NCR can go about its business once again."

Putting asunder what AT&T had joined together will take until the end of 1996. Then AT&T's 2.3 million shareholders--more owners than any other U.S. company can boast--will receive stock in each of three companies: