Putting The Perot Back In Perot Systems

Ross rejoins his namesake outfit, and the changes start at once

Ross Perot might be "temporary" chief executive at Perot Systems Corp. But nobody around the company's Dallas headquarters is questioning who's in charge. Since Nov. 10, the steely-eyed onetime Presidential candidate has been walking the halls, spouting his management bromides, poring over expenses, and

reconsidering everything from the corporate structure to recruiting tactics. As Perot himself might say, he's sticking his nose under the hood and fiddling with the engine of the computer-services startup he launched a decade ago.

Since taking the reins after the abrupt resignation in July of CEO James A. Cannavino, Perot has traveled worldwide to meet employees and customers. "My philosophy in business is to listen, listen, listen to people who do the work and listen, listen, listen to my customer," says Perot, who was chairman until 1992, when he left to run for President.

Still, there's been plenty of action since Cannavino's exit. Over a half-dozen managers have left, though Perot says only one has been fired. Perot has also reinstated drug testing of job applicants, and stepped up recruiting from the military. And he admits he's reconsidering the health benefits for same-sex partners Perot Systems introduced a year ago.

TOUGH QUESTIONS. What brought Ross back? His detractors think he was simply bored after fading from the political spotlight. But others familiar with the 67-year-old entrepreneur figure he was frustrated that the company that bore his name had gotten off track with excessive spending and an inconsistent strategy.

True, Perot Systems has been growing nicely, thanks in part to a huge outsourcing contract with Swiss Bank, which was renegotiated in 1997 (table). Sales are expected to hit $780 million for 1997, up from $600 million in 1996. But expenses have soared, too, prompting tough questions from Perot, say some former employees. Securities & Exchange Commission filings show Perot Systems' revenue jumped 30% during that period, to $557 million, while operating income fell 28%, to $21 million.

Perot--who's taking no salary and paying his own expenses--insists he's searching for a permanent CEO. But some former employees wonder whether Perot is also trying to return to the days when he founded Electronic Data Systems Corp. in 1962. They figure a man who shuns electronic mail ("I can't have a conversation with a memo," says Perot) may not fit into the wired world. Former insiders say he once viewed the Internet as a fad. And they believe he is no fan of the consulting practice that Chairman Morton H. Meyerson and reengineering guru James A. Champy have planned for Perot Systems. Perot denies holding such views.

Perot also insists that he's not worried about any financial problems. "We have a great company," he says. "We have a great base of business. The only reason I'm directly involved in doing these things is that Mort [Meyerson] is buried in a number of major opportunities." Meyerson declined comment.

But there was also Cannavino. The former head of IBM's PC business clearly grated on Perot, ex-employees say. For example, when Perot called or paged Cannavino, he often had to wait for a reply. Perot, who stresses family values, likely was not pleased to hear tales about Cannavino, who while separated from his wife started dating another woman, whom he has married. Asked about those events, Perot snaps, "you've been listening to silly gossip." Cannavino refused to discuss his relationship with Perot, his personal life, or the circumstances of his departure.

So how long will Perot stay on? In a speech to Dallas employees on Nov. 10, Perot insisted: "When the new [CEO] comes in, I'm going to be around until that person is completely up the curve, fully trained, and practicing [my] business philosophies, and then I'll ease back out of the way. That may take a while."

It may also take a while longer for Perot Systems to go public now. Perot, who controls 40% of the stock, seems in no hurry. "A company should never go public until you know absolutely that you can produce continued growing earnings," he says. With his name on the door and his hand on the wheel, he has reason to prove that he can do that.

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