AT&T Corp. (NYSE: T) president and head of consumer operations Betsy Bernard resigned Tuesday, setting off negative chatter among analysts who track the company on Wall Street (see AT&T President Resigns).

”Managing a business with declining revenues and undergoing consequent downsizing is presumably not as enjoyable as some other alternatives Bernard might be pursuing,” quipped Adam Quinton, analyst with Merrill Lynch & Co. Inc., in a note to investors.

Bernard was due to give the keynote speech at the FT World Telecommunications Conference in London yesterday, but pulled out at the last minute. She was replaced by William Archer, AT&T's newly appointed president for Europe.

AT&T and other long-distance carriers are struggling with weak demand, price wars, and a customer shift toward wireless and cable operators. In the third quarter, AT&T's sales to residential customers fell 15.8 percent (see AT&T's Q3 a Real Puzzler).

Bernard, 48, was an 18-year veteran of AT&T, returning to the company in March 2001 as CEO of AT&T’s consumer operations after stints elsewhere as CEO of Avirnex Communications and executive VP of retail markets at U.S. West/Qwest Communications International Inc. (NYSE: Q) (see AT&T Names President-Elect).

Her role at AT&T explicitly involved preparing the company to IPO as a tracking stock. Those plans were subsequently shelved. In October 2001, she was made president-elect of AT&T.

Analysts say that given the original reasons Bernard had for rejoining AT&T, one personal goal may well be to secure a role as CEO of a quoted company.

Reading between the lines of Bernard’s official statement, this sounds feasible: "I look forward to finding the right leadership opportunity in the next phase of my career," she said.

Bernard will be replaced by William J. Hannigan, 44, a seasoned telecom executive and old buddy of AT&T CEO Dave Dorman. Hannigan was most recently chairman and CEO of travel firm Sabre Holdings.

Prior to becoming CEO of Sabre, Hannigan spent 16 years in the telecom services industry, most recently at SBC Communications Inc. (NYSE: SBC), and before that at Pacific Bell Internet Services. His longest stint was at Sprint Corp. (NYSE: FON). Interestingly, he worked with Dave Dorman at all three of these companies, so they clearly already know each other.

"Dorman has decided to bring in a senior executive with greater experience in the business services arena – clearly the future of AT&T, given the dramatic rate of contraction of its consumer revenues," continued the note from Merrill Lynch's Quinton. AT&T's consumer revenues have fallen 20 percent year-over-year over the 2000-2003 period.

Shares of AT&T slipped 0.29 percent to $20.29 in early afternoon trading on the Nasdaq.

— Jo Maitland, Senior Editor, Boardwatch