Word: geneen
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Dates: during 1980-1989
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...unites two companies with similar histories. Both Allied and Signal have been fueling growth through a string of acquisitions. Allied's sales have more than doubled since Hennessy became chief executive in 1979. He had previously worked for two celebrated conglomerate builders, Harry Gray at United Technologies and Harold Geneen at ITT. Geneen sent his former deputy a congratulatory telegram last week saying "Great work." During his tenure at Allied, Hennessy acquired nearly 35 companies. His most dramatic coup came after a long and nasty takeover battle: the 1982 purchase of Bendix, an aerospace and automotive-parts manufacturer...
Some business executives are skeptical. They believe that entrepreneurship cannot exist inside a large company on more than a token basis. Harold Geneen, the builder of ITT, contends in his 1984 book, Managing, that "entrepreneurism is the very antithesis of large corporations." Shareholders, he says, will never stand for the risks involved...
...decision to streamline ITT was a long time coming, partly because Geneen was a long time going. He turned 65 in 1975 but was reluctant to retire. Staying on as chairman, he installed an heir apparent, Lyman Hamilton, as % chief executive officer in 1978. But after Hamilton started planning a big reorganization, Geneen sacked...
...When Geneen finally turned over the chairmanship to Araskog in 1980, he kept a seat on the board of directors. Says Robert Sobel, author of ITT, a 1982 history of the company: "Araskog wanted to sell a lot of companies at the outset, but Geneen seemed to think that selling anything that he originally purchased represented a slap in the face." Some Wall Streeters believe it was not until Geneen left the board in May 1983 that Araskog, a West Point graduate who grew up on a Minnesota farm, could assume full command. The clearest signal that he was committed...
...that time, ITT was already mired in a slump. Profits were an estimated $462 million in 1984, down from a 1980 peak of $894 million. One reason for the poor performance was that the company's $8 billion debt, largely a legacy of the Geneen years, generated an annual interest bill of more than $600 million. In addition, ITT received a large portion of its revenues in foreign currencies. Profits were depressed because these currencies weakened against the dollar...