Enough. It's time for the board of AT&T to find real leadership. For too long, the company has been spinning its wheels under Chairman and Chief Executive Officer Robert E. Allen. It's up to the board to ensure that Allen sticks to his stated plan to step down as CEO next January and as chairman next May.

The forced resignation of John R. Walter is the most telling example of how poorly Allen has been serving the company. Last year, Allen recruited his own successor, choosing a surprise candidate, the CEO of printer R. R. Donnelley & Sons Co. But Allen has been voicing concerns about Walter to other directors, and on July 15, he told the board that he didn't think his man was ready to become CEO in January, according to Walter Y. Elisha, the AT&T director who will lead the new CEO search. Outside directors voted unanimously that Walter shouldn't get the CEO post in January. Walter resigned and said in a press release, "I believe I am perfectly qualified to be CEO of AT&T right now."

LONG-DISTANCE LOSS. What next? Allen had planned to give up the CEO title in January and the chairmanship in May. Now, Vice-Chairman John D. Zeglis will run day-to-day operations while Allen, Elisha says, will stay on as long as the board needs him. "I think this means Allen is firmly in place," says J. Christopher Landes, a consultant at TeleChoice Inc.

Leaving Allen in place would solve none of AT&T's problems and perhaps create new ones. AT&T's leadership in the U.S. telecom industry is already slipping. It's losing share in long distance and is grasping for a way into the $100 billion local business. Allen's best idea was to attempt a massive merger with SBC Communications Inc. But federal regulators immediately attacked the idea, and SBC pulled the plug. "It's frightening to see a company this big shooting themselves in the foot over and over," says Jeffrey Kagan of Kagan Telecom Associates.

Who could run AT&T now? In the near term, Zeglis could fill in. He has been leading the company's efforts in local calling, but lacks operational experience. Elisha says when the list of CEO candidates comes out, "John's name will be on it."

The board should aim higher. After all, Zeglis was already passed over twice for the COO job. AT&T needs a dynamic leader with the technical savvy to push the phone giant into new markets. One long-shot possibility: George M. C. Fisher, the chairman and CEO of Eastman Kodak Co. The former CEO of Motorola is already on the AT&T board and has the right resume. But Kodak is in the middle of a strategic turnaround. Still, AT&T watchers point out that Fisher is one of the few outside directors not on the CEO search committee. "If he's not on the search committee, it's Fisher," says one former AT&T exec.

That may be wishful thinking. But it's time for AT&T directors to wish for something better--for the company and its beleaguered shareholders.

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