American Telephone & Telegraph Co. continued to earn profits in the first week of its nationwide strike, but if the deadlock with the Communications Workers of America becomes prolonged, the company may suffer substantially and the union may be dealt a major setback, according to industry and labor analysts.
The stalemate between the nation's largest telecommunications company and the largest high-tech labor union also could affect whether unions will be a significant force in a highly automated growth industry in which they have had rel- atively little influence, the analysts said.
The stakes are high on both sides.
AT&T -- one of the nation's most widely held stocks, with 2.9 million shareholders -- is attempting to fight tough new competitors in the global telecommunications and computer business. The 600,000- member CWA is seeking to expand by recruiting from among the same firms and is facing difficult negotiations in the next 60 days with seven regional telephone companies, including Bell Atlantic, which employ half the union's membership.
"This is a very poor time in history for AT&T to be out on strike, but they don't want to give away the farm to the union either," said John S. Bain, a former AT&T financial planner who is a Wall Street analyst for Shearson Lehman Bros.
Both AT&T and the CWA have new chief executives seeking to establish themselves as forces in industry. AT&T Chairman James E. Olson, a Bell System veteran, is leading an effort to trim labor costs to meet AT&T's primarily nonunion competition, while CWA President Morton Bahr, a 30-year union stalwart, is attempting to position the CWA as a union of the future.
If the strike drags on, MCI Communications Corp. and other long-distance firms can take business away from AT&T by offering faster and possibly cheaper installation of telecommunications networks, and by winning more residential long-distance customers.
"You assume everybody would like to take a piece of AT&T's business," MCI spokesman Gary Tobin said.
In the first week of the strike, AT&T is "sitting on top of an automated money factory" and could make several hundred million dollars in profit by continuing to run its 90 percent automated phone system, while saving about 59 percent of its payroll costs, Bain said.
But he and other analysts said AT&T faces pressures it never encountered when it monopolized the industry before the 1984 court-ordered breakup of the Bell System. In 1983, the then-larger AT&T endured a 22-day strike by 500,000 CWA members -- yet probably profited or broke even because it saved in payroll costs while generating revenue from its monopoly of long-distance and local telephone service, analysts said.
Now, with the Bell divestiture, AT&T is more vulnerable, Bain said, because the company is competing to expand its customer base during the "equal-access" competition with MCI and other firms, and because AT&T now has major competitors that can erode its position as the leading maker of telecommunications equipment.
AT&T has closed 11 of 24 factories making its equipment, but has kept 13 open because its second union, the International Brotherhood of Electrical Workers, has tentatively agreed to a new contract for its 41,000 AT&T members. But the IBEW-represented factories depend on the 11 struck plants to provide many components, and analysts predict that most AT&T production could close in two to four weeks.
The CWA estimated that the company was losing $60 million a day in revenue because of the diminished volume of long-distance calls that operators could handle and because of a sharp drop in installation of new, high-priced office equipment. But most analysts said they believed the union estimate was greatly inflated.
On Friday AT&T expanded its effort to hire temporary replacements to weather the strike. The company said that it would have up to 7,000 temporary operators, along with supervisors, to replace about 38,000 striking operators. It said it would rehire several hundred retired managers and employ temporary sales clerks for its Phone Center stores.
AT&T has never before hired temporary strike replacements, according to union officials. The company has previously been able to endure strikes with relative ease, analysts said, because it has 118,000 management personnel -- or one manager for every 1.8 employes.
AT&T is also preparing to shift managers, starting Monday, away from duties as fill-in operators and to the task of installing and maintaining office communication systems, which is AT&T's most competitive business.
Strikers, who depend on weekly paychecks ranging from $414 for operators to $646 for skilled technicians, immediately felt the financial pinch of the walkout, and can receive emergency aid from the CWA. The union has a multimillion-dollar "defense fund" that it said would guarantee payments to forestall foreclosures or evictions of strikers. But officials said they were unsure how long such a fund would last in the event of a long strike.
AT&T's other major competitors -- Northern Telecom Inc., Rolm Corp. and International Business Machines Corp. -- would be among the major beneficiaries of a lengthy AT&T strike, analysts said. "There might be some opportunity for us," said Richard Lowe of Northern Telecom. "There could be a situation where AT&T may miss a delivery date, in which case an order could be canceled and it would be an opportunity for us to go in."
CWA's Bahr attacked AT&T late last week for "terribly dishonest" statements in its nationwide advertising campaign. The ads said the company was asking "absolutely no givebacks" from employes, but Bahr said AT&T is insisting on ending cost-of-living adjustments, downgrading technicians' jobs and ending bonus pay for thousands of factory workers.
"We're going to demonstrate that this strike has the full support of every union in America," Bahr said. He said the CWA plans to "escalate" strike activity with the aid of the AFL-CIO, community groups and the National Organization for Women. Fifty-three percent of the CWA's membership is female.
"If the public image is that CWA went on strike and didn't win anything, it would clearly be a setback for their effort to go places," said analyst Bain. The union is attempting to organize workers at MCI and other telecommunications firms, "and the job of the union is to win things. And like any politician, that's how union officials stay in office," Bain said.