The Little Giant

As the nation's largest independent telephone company, General Telephone Corp. has been eclipsed by American Telephone & Telegraph Co. only because next to A. T. & T. any other corporation would look small. But General Telephone is a giant in its own right. Last week it planned to grow bigger. Its directors approved a deal, subject to stockholder approval on both sides, for General Telephone to take over Sylvania Electric Products Inc. on a share-for-share trade. The result: $1.5 billion in total assets, 76,000 employees.

For both companies the merger is a good deal. Sylvania has expanded some 17% in the last five years and has a $60 million backlog of defense orders for missile components and electronic systems. But it needs more capital. On its side, General Telephone needs a bigger base in the electronics field, anticipating the day when telephone service will dispense with some land lines and electromechanical switching equipment, take to radio and other electronic equipment. In April 1957 the companies reached the "getting to know you" stage when General Telephone President Donald C. Power, 58, went on Sylvania's board. In the merged General Telephone & Electronics Corp., Power will be chairman and chief executive officer; Sylvania's President Don G. Mitchell, 53, will be president.

For General Telephone, the little giant of the phone business, the road up began in 1935 with the reorganization of Associated Telephone Utilities, a bankrupt grab bag of country telephone companies, mostly in the Midwest. Hampered by antique equipment, the company hung on through the '30s and the war years, in 1945 entered the postwar period with 713,453 telephones. The postwar shift to the suburbs and exurbs lifted that to 1,417,109 by 1951, when Power, a Winer Ohio State University economics professor, law partner of Senator John Bricker and general counsel to Ohio's Public Utilities Commission, took over as president. Last year's 3,000,000 subscribers were served by 28 subsidiaries operating in 5,306 U.S. communities, and in areas of Canada and the Dominican Republic.

As an old rate man, President Power went to work to increase rates, got state utility commissions to okay changes that raised average earnings from 4.3% on investment to 6.6%. Then he used the income to improve service in existing companies, acquire new ones.

Financially, General Telephone has managed to avoid the drop in per-share earnings that usually comes with the dilution of ownership through rapid expansion. In the first nine months of this year, General Telephone earned $36 million or $2.29 a share of common v. $33.8 million or $2.25 last year.

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