Restoring the profitability of Burroughs Corp. should be challenge enough for W. Michael Blumenthal, who landed at the Detroit-based computer firm in 1980 after being bounced from former President Carter's cabinet two years ago.
But beyond that, Blumenthal also is trying to change the company's personality.
Blumenthal 55, who became Treasury Secretary in the Carter administration after heading Bendix Corp., took over at Burroughs in September 1980, as the company was sliding downhill fast from its best year ever.
By the end of 1980, net income was 73 percent lower than in 1979, thanks largely to a $68.7 million deficit in the last three months of 1980, the first quarterly loss in 17 years.
Development of a high-powered scientific computer system was aborted and the remaining lines of business calculators and adding machines--the products that built Burroughs--were abandoned, contributing to a $27 million write-off.
Last year's economic slowdown and some tough competition from industry leader International Business Machines exposed a serious problem of loose sales accounting methods, compelling the company to make an embarrassing recalculation of its inventory position and a costly sell-off of slow-moving products and parts. The loss from these steps totaled nearly $70 million.
Finally, Blumenthal turned the top management of Burroughs upside down, offering early retirement at half pay to executives and managers age 55 and older in a calculated effort to clean house. One-third of the company's managers took the offer at a cost of $16 million.
Behind all this turmoil is Blumenthal's decision to remold Burroughs according to his design, removing the personal stamp of Ray W. Macdonald, Burroughs' chief executive from 1967 to 1977 whose single-handed managerial style had created Burroughs' sizable slice of the computer market.
Blumenthal discussed the change at Burroughs recently in an interview in his office in Detroit.
"Essentially, all the decisions were made out of this office," said Blumenthal, referring to Macdonald and his successor, Paul S. Mirabito, whom Blumenthal eased out of the top post.
"There was a tendency to expect the big boss to make all of the decisions. The task of the rest of management was to staff him, to write memoranda, to have meetings, to raise questions . . . but not to decide.
"I was told early on that Burroughs has a lot of good order-followers. That's true. People are very diligent, very dutiful about carrying out orders, even though they may think it's crazy.
"The boss says do it, they say okay." Not everyone was like that, of course, Blumenthal said, but the tendency was very common.
The holes left by the early retirements have been filled by young outsiders--notably Paul G. Stern, 42, a physicist recruited from a high-level job at IMB, and Thomas E. Winter, 43, former operations vice president at Xerox Corp. Both are executive vice presidents.
Burroughs' product line, concentrated in computerized accounting systems for banks and other financial institutions, is being shifted to aim at areas with greatest growth potential. The biggest step is the planned acquisition of Memorex for $106 million, which is designed to make Burroughs a strong competitor in storage and retrieval of computer data.
Strategic planning and financial controls now get a top priority, Blumenthal said, with managers up and down the line responsible for hitting financial goals.
"This is a company that grew like Topsy with decisions made quarter-to-quarter. They didn't really plan ahead." Managers now know that the boss isn't making all the decisions, said Blumenthal, who admits he is still learning the computer business.
"Those are major changes in attitude, and it takes quite a while for people to realize what that means," he said.
What it means for Burroughs won't be immediately obvious.
"I have been very careful to avoid predictions," said Blumenthal (whose first attempts at fortune telling after taking charge of Burroughs were embarrassingly off target).
Burroughs will not reach $5 a share in 1981, Blumenthal said and won't come close to the $7.45 earnings per share of 1979. "Next year is also not going to be the most brilliant year imaginable."
But by 1983, it should be obvious that Burroughs has righted itself. "It's not a company that's in really serious trouble. It just had to stop and catch its breath," he said.