This is a partial transcript from "Your World with Neil Cavuto," November 18, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: It's not quite the company it was, or even the widow and orphan stock it was or the giant multi-national conglomerate it was, but it's still big, still very big, and still very important.

And for David Dorman, it is still home and the place he still runs. With us now the man who's in charge of AT&T (search), David Dorman. David, good to have you.

DAVID DORMAN, CHAIRMAN AND CEO, AT&T (T): Good to be here.

CAVUTO: You're not going to do that Vegas ride, are you?

DORMAN: I don't think so. I've already done that the last two years.

CAVUTO: Yes. Things are stabilizing, though, it seems to me. What do you think?

DORMAN: Well, I think we feel like that the worst over, but you know, we're in an industry where there's still too many competitors. There's still room for a few people to be crazy.

So we've been very conservative with the way we've managed the company and the balance sheet. We paid off a lot of debt, almost $50 billion in the last three and a half years. We've got cash.

CAVUTO: Do you think in retrospect the whole cable thing was a mistake?

DORMAN: No. I think that having a set of assets today like AT&T assembled five years ago would be a great hand. I think the fact was it was done at the top of the market, you know, very rich prices. A lot of debt was run up, and it became difficult to manage together.

CAVUTO: Still, you know, people say you're a fraction of what you were. You just announced, I think, there was 7,000 layoffs. Thousands more before that. What's left?

DORMAN: Well, we're a $30 billion company. We generated $1.1 billion of free cash flow in the second quarter. About $1.8 billion of EBITDA. There are not that many companies that generate, you know, that size of financial return. Obviously, it's not what it was before, but AT&T was always a Fortune 10 kind of company.

CAVUTO: Yes. But I know you're still the No. 1 phone company and all of that, but the talk is that you have to hook up with someone else. The one that gets the most rumors is Sprint.

DORMAN: Well, I can't comment on rumors.

CAVUTO: You're a former Sprint (search) guy. You know a lot of people there.

DORMAN: I did work at Sprint for 12 years, but I think that what happens with these kinds of things is people speculate that the industry structure is still very confused. You have a lot of business just in long distance, just in local.

Obviously, those services are converging, so it makes sense to think about an industry that has larger players that have broad portfolios, and I think that's the reason you hear the rumors.

CAVUTO: Are you against a takeout from someone else?

DORMAN: Well, I think that, you know, running a public company, we work for shareholders, and the board is obligated along with management to produce the best returns possible. We have a strategy to go alone, because you can't count on something you can't know about or...

CAVUTO: Well, I know your strategy is to go alone, but the reality from many in the analyst communities is that it could be the baby Bells or the aforementioned Sprint or something to keep you vibrant going forward.

DORMAN: Our view is that we have a business franchise that's unlike anything else in the world. We're the leading provider of business communication services. We're a profitable company with a strong balance sheet.

And we're not in the situation where we feel like every morning we get up, you know, we're thinking about, "Gee, if we don't have a partner, we're not going to make it."

CAVUTO: Well, you know, I was thinking, maybe ignorantly on my part, David, so I apologize, that with MCI WorldCom's problems that they would be your gains, and that never materialized. Why?

DORMAN: I think that if you look at the most recent quarter, our business services company grew sequentially for the first time in nine quarters.

We were up 6/10th of a percent revenue over second quarter. The similar business at MCI was down three percent plus, as well as Sprint being down about 3 percent plus.

So in the last quarter at least, and it's too early to say it's a trend, we did benefit and take some market share.

I think as you look out over the next year, we feel very good about where we're positioned with customers, increasing our share of wallet in our large customer sector while losing market share at the low end of the market as the Bells enter long distance at the low end.

CAVUTO: All right. In the meantime, you still stand by a line you were quoted as some time back: "We're not a phone company; we're now a networking company." Is that true?

DORMAN: That's pretty close.

CAVUTO: Yes?

DORMAN: I think that's the way to think about us.

CAVUTO: All right. David, thank you very much for coming by. David Dorman, the chairman and CEO of AT&T, here in the flesh.

DORMAN: Thanks a lot.

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