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GTE Veteran Picked as CEO for Struggling Ingram Micro

Technology: The computer products distributor, Orange County's largest firm, needs a turnaround. Kent B. Foster knows how to manage change.

March 07, 2000|ROBIN FIELDS | TIMES STAFF WRITER

Computer products distributor Ingram Micro Inc. named former GTE Corp. President Kent B. Foster as its new chief executive Monday, ending six months of uncertainty over who would lead the troubled Santa Ana giant.

Foster takes over from Jerre Stead, 57, who guided the company to a pinnacle of profitability in mid-1998 before an industrywide price war sent its results down. He also will succeed Stead as Ingram's chairman in May, the company said.

Foster said Monday that he had no immediate plans to overhaul Ingram's strategy. Stead and his crew already have taken steps toward putting the company back on track, he said.

Ingram has begun to charge fees for its services rather than add markups to the products it resells, a shift meant to protect its profit margins in price wars and to create earnings centers.

Ingram also helped to create RosettaNet, a computer language that will ease business-to-business online transactions. The company hopes to capitalize on RosettaNet through a new subsidiary that will act as an Internet marketplace where such transactions can be conducted.

"I think the company is headed exactly where it should be," Foster said.

On a day in which many stocks took a beating, Wall Street yawned at Ingram's news. The stock price lost 38 cents a share Monday to close at $11.19.

On the surface, Foster's 29-year career in telecommunications would seem to make him an odd match for Ingram, which serves as the world's largest pipeline between computer-industry manufacturers and retailers.

But as GTE's second in command, Foster, 56, presided over a sweeping consolidation and modernization, bringing GTE into the Internet age and back into the long-distance service market.

Ingram too is in transition, re-envisioning itself as a business-to-business e-commerce company rather than a traditional wholesaler.

"We wanted someone experienced in an industry that went through a major transition, who had an understanding of the Internet and who could be an agent of change," Stead said.

Ingram, Orange County's largest company, needs a turnaround.

Its profits fell 25% last year even though sales grew 27%, reflecting the razor-thin margins that drove several rivals out of business or into mergers. Its stock price has dropped 79% from a high of $52.11 in October 1998.

The reversals have shaken morale, prompting more than 20 Ingram executives to leave. Stead, who took the reins in 1996 and was once Orange County's highest-paid executive, announced in September that he would step down once a successor was found.

Analysts praised Foster's appointment, saying his long experience in the upper echelons of management would steady Ingram.

"It will help the company define its vision and strategy, which has been difficult with a temporary leader," said Tom Cal, an analyst with SoundView Technology Group. "I was impressed with his understanding of Ingram's role as an information aggregator and not just a mover of physical products."

Foster, a former Air Force captain, joined GTE in 1970 as a supervising engineer and chugged steadily through the ranks until he was elected president in 1995. He announced his retirement in November as GTE reorganized its top ranks after merging with Bell Atlantic.

Foster had planned to take six months to think about his next move, but Ingram had other ideas.

Company officials started courting him in December and negotiations culminated with Foster's formal introduction before senior Ingram executives on Saturday. Foster also will replace J. Phillip Samper on Ingram's board of directors, the company said. Samper, 65, is retiring.

Foster has worked mostly from GTE's headquarters in Texas and Connecticut, but he has at least one local tie, Stead noted: a master's degree in management from the University of Southern California.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Leadership Change at Ingram

Ingram Micro Inc., the world's largest computer products distributor, named a new chief executive Monday. Though it remains profitable, the company's earnings have been declining for the last 18 months.

The company at a glance:

Name: Ingram Micro Inc.

Business: Computer products distribution

Headquarters: Santa Ana

Employees: 12,600

Leadership: Kent B. Foster, chief executive; Jerre Stead, chairman*

Net income (millions):

1995: $84.3

1996: $110.7

1997: $193.6

1998: $245.1

1999: $183.4

*

Revenues (billions):

1995: $8.6

1996: $12

1997: $16.6

1998: $22

1999: $28.1

Stock price: $11.19

Note: Foster will replace Stead as chairman in May.

SOURCES: Bloomberg News, Times research

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