So Who Needs To Be President?Mark Lewyn
Q: What will you do now, Mr. Perot?
A: Go to work. Go to work. I've got to pay the bills.
--Ross Perot after his July 16 withdrawal from the Presidential race
Of course, Ross Perot doesn't really have to worry about how he'll pay his bills. He made a fortune by building Electronic Data Systems Corp. into a computer-services powerhouse and then selling it to General Motors Corp. for $2.6 billion in 1984. But he does have a lucrative project to occupy his time. Perot Systems Corp., which he launched four years ago, is growing almost as fast as calls to his 800 lines are dwindling. The builder of custom computer systems landed more than $1 billion in new business in the past six months, including major contracts in Europe (table). Merrill Lynch & Co. analyst Stephen McClellan estimates that Perot Systems' revenues will hit $200 million this year and grow 20% annually in the next several years.
As an entrepreneur, at least, Ross Perot is riding high. Indeed, Perot Systems, in Herndon, Va., is doing so well that it may attempt an initial public offering as soon as next year. McClellan says the company is already profitable. Assuming a valuation of three times the projected 1993 revenues of $250 million, McClellan calculates that Perot's current 40% stake would be worth $300 million after an IPO. Employees own the remaining 60% of the shares.
DYNAMIC DUO. Even during the campaign, Perot talked nearly every day with Perot Systems President J. Patrick Horner. Also mixing business and politics was Morton H. Meyerson, Perot's campaign adviser, who has served since June 1 as chairman and CEO of Perot Systems. Meyerson is known as the operations and strategy whiz, while Perot is the supersalesman. "They're like Butch Cassidy and the Sundance Kid," says Graham S. Kemp, president of market researcher G2 Research Inc. in Mountain View, Calif. The pair ran both the campaign and the company until July 16, when Perot unexpectedly pulled the plug on his political career.
The duo didn't miss a beat. Just two days after Perot folded his campaign, Meyerson presided over a board meeting at a Dallas hotel. While Perot was elsewhere trying to mollify ex-volunteers, Meyerson laid out an ambitious scheme to delve into customers' business strategies and then create elaborate, customized information networks that give them an edge over their competitors.
The company's original mission was more modest. It was to be simply a systems integrator, weaving varied brands of computers and software into seamless networks. Then, the company expanded into "outsourcing"--taking over the actual operation of its customers' information systems. Now, in stage three, it's aiming to convert those information systems from costly tools into profit-making weapons. How? By using computers for such jobs as constantly tracking inventories and spotting opportunities by crunching up-to-the-minute data. Retailers could instantly learn, for example, that yellow juicers sold well in Florida yesterday while the 2-for-1 special on paint was a bust in the Midwest.
By creating strategic systems on inexpensive personal computers rather than mainframes--as EDS has often done--Meyerson hopes to expand the market. A 21-year veteran of EDS, he became a reborn believer in personal computers after consulting for personal-computer maker Dell Computer Corp. Similar to Canada's Systemhouse Ltd., Perot Systems now promotes PC expertise as its advantage over market leader EDS.
A $450 million deal with Paris-based rental-car giant Europcar will be the first test of the new Perot Systems strategy. Perot Systems will revamp everything from fleet management to check-in systems. Personal computers in Europcar's offices will be connected so that information about a particular customer will be available in all 2,016 European offices, rather than only the office where the customer rents a car. That will save minutes at pickup and drop-off. Europcar, relieved from running its own network, expects to reduce the cost of information processing from 7% of its sales to 3% by 1994.
By taking over Europcar's 130-person computer staff and nine-country network, Perot Systems will gain a platform for selling computer services to other European clients. Andy Maluish, managing director for Perot Systems/Europe, says the company's goal is to garner half its revenues in the European Community by 1997, up from 25% now. According to Europcar CEO Fredy Dellis, Perot Systems beat out such heavyweights as EDS, IBM, Siemens, and European market leader Cap Gemini Sogeti. Perot flew to Paris in April to thank Dellis personally and address a Europcar convention at Euro Disneyland. Later, he joked that when he became President, there would be a red phone in the Oval Office linked directly toEuropcar.
`KNOW-IT-ALLS.' Not even Ross Perot can nail down every sale. In 1990, when Continental Airlines Holdings Inc. and its System One Corp. reservation unit entertained bids for a large information-services contract, Perot Systems executives swept in like know-it-alls, recalls Richard E. Murray, System One's former chief executive. "I had to finally tell them that they were the vendor and I was the customer," Murray says. The $2.1 billion, 10-year contract ultimately went to EDS, which offered better telecommunications.
Brashness may have its drawbacks, but advising people how to run their companies is the whole point of Perot Systems. And the take-no-prisoners aggressiveness that Perot instills has clearly been attracting customers. The company says there's no evidence that Perot's fast exit from the Presidential race has turned off any of them. Meanwhile, the ending of the campaign, says Merrill Lynch's McClellan, "eliminates a big distraction for the company."
It also allows Perot to devote more energy to his favorite pastime: making sales calls. Now, if the cartoonists would just lay off . . . .