Los Angeles could be about to lose one of its most respected business leaders.

C. Michael Armstrong, chairman and chief executive of Hughes Electronics Corp. , based in El Segundo, is again near the top of the list to take over the helm of telecommunications giant AT & T; and according to industry insiders he is ready to go.

“If AT & T; makes a proper offer I think he’ll take it,” said Robert Paulson, former McKinsey & Co aerospace advisor, now at Aerostar Capital Inc. in Santa Monica.

Armstrong has been widely reported as the second strongest candidate to succeed AT & T; chairman Robert E. Allen. The position came open in July after chief executive and chairman-in-waiting, John Walter, resigned after just one year on the job.

Armstrong was shortlisted a year ago for the position Walter eventually took, but was said to be unwilling to sit in the wings until Allen’s departure. This time, the AT & T; chairman has said he will step down once a successor has been found.

Armstrong’s greatest competition comes from AT & T; vice chairman John Zeglis, who appears to be the popular choice among AT & T;’s rank and file. The argument against the 50-year-old Zeglis is that he is too young for the top job and has a reputation for excessive risk taking.

Armstrong declined to be interviewed for this story, while officials at AT & T; said they could not comment on the executive search.

In his five years at Hughes, Armstrong, 58, is credited with transforming the company from a unprofitable, defense-dependent behemoth into a fleet-footed contender in the lucrative commercial satellite business.

“Before Armstrong, Hughes was run by scientists doing secret things in secret ways for secret customers,” Paulson said.

Hughes Electronics’ core business involves building and launching communications satellites. In recent years the firm has nurtured its satellite television subscription service DirecTV, which now reaches more than 2 million subscribers.

His acknowledged success at Hughes may be his greatest incentive to jump ship.

Jon Kutler, an analyst at Quarterdeck Investment Partners, based in Los Angeles, said: “Hughes is 80 percent of the way there and guys like Armstrong are always looking for new challenges.”

General Motors Corp., which owns Hughes Electronics, may not be doing enough to keep Armstrong at his desk.

GM is selling Hughes Aerospace, which still focuses on developing military hardware, to Raytheon Co. of Lexington, Mass. This effectively cuts Armstrong’s fiefdom in half.

As if to make amends, some reports say that GM has offered the chief executive a $10 million bonus if he remains in El Segundo until 2003.

Armstrong is well suited for the top spot at AT & T;, analysts say. Besides his expertise in running a telecommunications firm, he has a strong background in developing business overseas, an area in which AT & T; sorely wants to grow.

Prior to joining Hughes, Armstrong was on the management board of IBM Corp., where he spearheaded overseas sale. He also knows what it is like to be an outsider at the helm of large firm bound by corporate tradition.

Due to his lack of defense-industry experience, Armstrong’s appointment in 1992 was greeted with a great deal of skepticism by both analysts and old-time Hughes employees.

Michael Beltramo, of aerospace consulting firm Beltramo & Associates in Los Angeles said: “When I first heard the news I wasn’t impressed. But since then I’ve turned from a complete skeptic to one of his biggest fans. Hughes has made the right moves right down the line.”

Analysts were not concerned that the loss of Armstrong would halt the progress made by Hughes in recent years.

“If he didn’t have staff in place that could run things without him he would not be such a good executive” Beltramo said.

A decision by AT & T; could come as early as the end of this month, analysts said.