AT&T dives as president departs

Shares of AT&T, the biggest telephone operator in the United States, dropped sharply yesterday on news that Alex Mandl, the company's president and highest ranking operations executive, was leaving to join a small start-up firm.

The departure came as a shock to the market mainly because he only had four more years to go before he was expected to take on one of America's most coveted corporate positions as chairman of AT&T.

Robert Allen, the current chairman of AT&T, is due to retire in 2000 and Mr Mandl was being groomed for the job.

Instead, the 52-year-old Mr Mandl has decided to take the job as chairman and ceo of Associated Communications, a new unit of Pittsburgh-based The Associate Group, which has several investments in Mexican wireless companies, owns about four radio stations and an even an art gallery. The Associated Group is a highly ambitious organisation nevertheless, and Associated Communications will develop high-capacity wireless networks in US cities.

AT&T's shares plunged $1.25 almost immediately on the news to trade at $54.25 (pounds 35) and worsened to trade in the early New York afternoon at $53.75, down $1.75.

"When you get a guy like Mandl leaving, who was right next to the throne, it's certainly worth asking whether or not there were some differences of opinion developing about the direction of AT&T," said Scott Wright, analyst at Argus Research.

AT&T insisted that there was nothing sinister about his resignation.

"Alex Mandl helped lead AT&T through five years of extraordinary challenges," said Allen in a statement. "It is not unusual in this industry, however, for opportunities at hi-tech start-ups to attract very senior corporate executives."

With Mr Mandl at the helm of its new subsidiary, shares of The Associate Group soared almost 14 per cent on the news, rising about $3.50 in morning trading to $29 a share.