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Merger Tests Blumenthal's Tough Style : Some Voice Doubts About Acquisition of Sperry by Burroughs

June 15, 1986|DONNA K. H. WALTERS | Times Staff Writer

DETROIT — The day after W. Michael Blumenthal returned to Burroughs' headquarters here from nailing down the Sperry acquisition, his desktop was neat as a pin, the fine wood glossy with polish. Topping a modest stack of papers in his in-basket was a magazine article that he said he hoped to read soon.

It was "Merger Syndrome: Stress and Uncertainty," by Los Angeles psychologist Mitchell Marks and Philip Mirvis. Within a week, the magazine article was read, Marks hired as a consultant and Blumenthal was out of town again, this time to Minnesota on a good-will mission to the largest concentration of Sperry's work force.

Blumenthal is wasting no time setting about to effect a smooth merger of the two companies. After all, running the No. 2 computer maker has been his goal since he joined Burroughs in 1979. And even though the merger is perhaps the boldest move yet in the computer industry and the biggest challenge of Blumenthal's long career, indications are that Blumenthal isn't about to change his style to fit the extraordinary circumstances.

The Big Picture

That means still shunning day-to-day tasks that might clutter his desk with paper work and choosing instead to deal with big-picture issues such as how employees of both companies will react to the $4.8-billion merger.

"The one thing I will avoid is to make all the decisions," Blumenthal said. "I would kill myself.

"I am not the good Lord, and I don't sit here and try to make all the decisions," he said in an interview from his office in the New Center area of Detroit, an area that also houses General Motors' headquarters and the Fisher Building, two of the city's landmarks. "I spend very little time making decisions. Sometimes I wonder why I am needed at all," he said. "I'm sort of like an orchestra leader, but I don't play any of the instruments."

So far, Blumenthal's style of delegating to a well-chosen management team headed by President Paul G. Stern has worked for him at Burroughs. It's a style that he also used earlier at Bendix, a Detroit-area automotive supplier that was considered one of the best-managed companies in the country.

A complex man who, associates say, likes to think of himself as an intellectual, 60-year-old Blumenthal has often been described as arrogant, aloof and ill at ease in group situations. His blunt manner often clashed with that of the Georgian contingent among the Carter Administration during his two-year tenure as Treasury secretary, colleagues say, and contributed to his ouster in 1979.

Critics who have tracked Blumenthal's efforts to raise Burroughs up a notch privately speculate that his ego was the driving force behind the Sperry acquisition. "He likes to make his presence known and his weight felt," one securities analyst said.

Skilled Negotiator

Yet Blumenthal is a skilled negotiator and can be witty and charming in one-on-one encounters. Community leaders praise his talent for getting to the heart of a problem, and former associates--including some that he has fired--remain fond of him.

As a businessman and economist--he received his Ph.D. from Princeton and later taught there--he scores high marks. "He understands business," said a critic who pointed out that Blumenthal joined Burroughs with no background in computers but "made a lot of right moves" at the company.

Indeed, many industry analysts privately admit to serious doubts about the Sperry-Burroughs combination but withhold out-and-out naysaying in deference to Blumenthal's track record.

George Podrasky, a securities analyst who has followed both Burroughs and Sperry for Duff & Phelps in Chicago, said the merger "is not a great idea."

But Podrasky, sizing up the "long process to put the companies together," also said that "Blumenthal and Stern will be a good team to do that. They've done a good job with Burroughs."

Blumenthal joined Burroughs in 1979 as vice chairman and chief executive-designate, becoming chief executive in the fall of 1980. At the time, the company was viewed as a technological leader but troubled by poor quality control and indifference toward customers. By then, it was generally agreed, Burroughs was failing to expand the niche it forged selling mainframe computers to customers that market leader IBM had neglected.

During the tenures of Raymond W. Macdonald, who headed Burroughs from 1967 to 1977, and his hand-picked successor, Paul S. Mirabito, the company maintained healthy growth rates and reached a record $305-million profit in 1979. But critics said the profits often came as the result of cutting corners in research, strategic planning and customer service.

Stodgy Image Hurt

Market forces, which included increased competition and pricing pressures, began catching up with the company. As the young, spirited firms of the West Coast's Silicon Valley began emerging as the stars of the computer industry, Burroughs slipped into a second tier of manufacturers grouped not as much by profitability as by stodgy image.

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