Moore's Recovery Looks Good On Paper

After more than a century of using its own paper business forms to write up customers' orders for new forms, Moore Corp.'s 1,100 U.S. salespeople are finally switching to laptop computers. By transmitting many of the company's 900,000 orders a year directly to its printing plants, Moore hopes to get orders filled in 5 days instead of 40, cut paper usage by 70%, and trim at least $35 million a year in costs.

The irony isn't lost on Reto Braun, the computer-industry veteran who took over as Moore's chief executive two years ago. Having invented the multipart business form in 1882, Moore has long led the industry. But as corporations capture, move, and store more information electronically, use of paper forms is falling. Braun, a 53-year-old Swiss native, says friends often ask: "When is the funeral?"

But the forms business isn't dead--and neither is Moore. To keep the undertaker at bay, Braun has launched a revolution at the Toronto-based company. Since taking charge in late 1993, the former IBM and Unisys Corp. executive has brought in new top management, closed 12 giant paper plants, and cut Moore's workforce some 15%. That helped earnings bounce back to $121 million last year. Now, he faces the more difficult task of repositioning Moore: changing it from an old-line paper giant into a 21st-century expert in engineering the flow of office information, both digitally and on paper. Braun vows the "new" Moore will grow 10% annually and earn a 15% return on equity, up from 9% in 1994.

PAPER FLAT. Those are breathtaking goals, given the dismal outlook for paper business forms, which account for more than 70% of Moore's sales. Christopher R. Bevevino, president of International Business Forms Industries, a trade association, predicts sales of conventional paper forms will fall to $6.6 billion by 1998, from nearly $8 billion in 1993. In contrast, sales of software that turns out electronic forms, while less than $300 million today, are growing at least 25% a year.

As the industry leader, Moore still serves a roster of blue-chip customers. But a complacent, ingrown management let competitors "eat our lunch for 20 years," complains Braun. He says Moore's share of the U.S. forms market slipped to just 13% last year from over 30% two decades back. The result: Between 1990 and 1993, its total sales dropped 16%, to $2.3 billion, while profits nosedived. "Moore reminds me of General Motors," says the CEO of one rival. "It's awfully difficult to turn around an aircraft carrier when everyone else has a fast-moving destroyer."

Still, if anyone is up to this job, it's Braun. As No.2 at Unisys, he won glowing reviews for guiding a brutal restructuring that restored profitability. That performance drew attention from Moore, whose board had been looking, for the first time, to hire a CEO from outside the company. In Braun, it got a disciplined leader, who relaxes by skiing and hiking in the Alps. After 25 years in computers, he quickly grasped the technical challenge.

PULP FACTION. "I don't want to be the last guy holding the flag for forms," Braun says, but in the next breath he insists that "paper is not going to vanish." While electronic forms may work well for internal communications, most companies still rely on paper for their dealings with consumers, whether it's bills or direct-mail marketing. So, Braun argues, what Moore must do is expertly apply just the right mix of paper and electronics. "If they do it right, they can retain customers and grow," says Steve Weissman of Hurwitz Consulting Group, based in Newton, Mass.

Braun's plan is to get the required technical expertise in a hurry. Last August, Moore bought 20% of Jetform Corp., a leading supplier of electronic-forms software, and negotiated an option to acquire full control. On Sept. 26, Moore signed a 10-year, $1.7 billion alliance with Electronic Data Systems Corp., General Motors Corp.'s computer consulting arm, which will help Moore streamline customers' businesses. One of the first joint projects: using laptops to reengineer and automate Moore's own sales-force and order-entry operations. Then, on Mar. 29, after announcing alliances with Indigo and Xerox Corp., Moore unveiled a digital print network. It will let customers design documents on their own workstations and instantly transmit the designs to the nearest Moore plant for printing. Using this system, for example, the Best Western chain is creating customized brochures for its motels.

Moore is winning some big orders. In December, it signed a deal, worth up to $200 million over five years, with Amerinet Inc., a large health-care purchasing organization. EDS, which previously bought forms from many companies, is also turning over to Moore its entire $75 million-a-year internal forms business. Moore can help save "millions of dollars a year" by eliminating needless duplication of forms, helping EDS print forms as they're needed, and converting paper flows to digital networks when appropriate, says EDS Purchasing Director Benny Welch.

Moore's prospects look even brighter in two smaller units--direct mail and labels--where computerization is actually boosting paper use. Serving giant clients such as Reader's Digest, Moore ranks as the world's largest producer of personalized direct mail. This business, too, is getting more high-tech. "Before, Moore was only a printer. Today, we're moving into database management," says Louis J. Rupnick, president of Moore's $507 million Customer Communication Services unit. The promise is "to massage vast customer lists to produce highly targeted marketing," Rupnick says. His goal: to expand Moore's direct-mail business by as much as 20% a year.

STICKLESS STICKERS. The once mundane business of producing sticky labels is also mushrooming, as companies increasingly apply bar-coded stickers to track products all the way from factory floor to retail shelf. Led by Richard W. Majewski, a veteran of the labels industry recruited by Braun last fall, Moore is spending heavily to muscle its way into this fragmented, $13 billion market. Majewski expects label sales to soar 30%, to about $250 million this year, and it "could become a $1 billion business in five years," Braun predicts. One big hit: a new backing-less label that's helping the U.S. Postal Service save 60% on changes of address.

Can Moore thrive in the Computer Age? It has the money, says Martin A. McDevitt, an analyst at Cleary, Gull, Reiland & McDevitt Inc., "to do whatever it wants." Between $564 million in cash and some modest borrowing, Braun figures he can spend up to $1 billion on vital acquisitions. And following three straight years of decline, sales actually climbed 3% in 1994 and a further 6% in the first quarter of 1995. Per-share earnings, meanwhile, soared 35% in the first quarter, not counting the proceeds from selling most of its stake in a Japanese operation. Still, "the jury is still out" on Moore's long-term future, McDevitt cautions. As in the old children's game, hardware, whether it's scissors or silicon, beats paper.

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