Armed with a checkbook, stock options and the kind of ambition that leads a man to name a company after himself, Sirjang Lal (Jugi) Tandon has become the George Steinbrenner of the personal-computer industry.
Like the controversial owner of the New York Yankees, Tandon has spared no expense to recruit a management all-star team to catapult his troubled Tandon Corp. from its limited niche as a leading disc-drive manufacturer into a major league personal-computer company.
"We do everything in a big way," said Tandon, an immigrant Indian entrepreneur who launched his company 10 years ago. "We'll never be in the middle."
"There's no question that Tandon's team is one of the smartest teams ever put together in this industry," said Seymour Merrin, a computer retail analyst with the Gartner Group.
In the last 10 weeks, Tandon has flabbergasted analysts with his hiring coups, which include the three men who were the core of the team that developed the ultrasuccessful IBM-PC four years ago:
*Dan H. Wilkie, an 18-year veteran with International Business Machines Corp. who ran that company's key personal-computer facilities in Boca Raton, Fla. -- overseeing finance, manufacturing, engineering research and development -- as Tandon's new president and chief executive officer.
*H. L. (Sparky) Sparks, lured away from Compaq Computer, a leading maker of IBM-compatible PCs, to be Tandon's executive vice president of sales and manufacturing. Sparks, who worked at IBM for 20 years, was instrumental in setting up the national retail network for the IBM-PC and, more recently, Compaq's retail network.
*William Sydnes, one of the IBM-PC's designers. Most recently president of Systems, Networks and Peripherals Inc., he will be vice president of engineering and development for Tandon.
That's not all. Tandon also has hired Chuck Peddle, the mercurial hardware wizard who helped design Commodore International's computer line and launched now-bankrupt Victor Technologies, as president of Tandon's new computer subsidiary.
"There are no virgins in this group," said Wilkie, who cheerfully declined to disclose the financial emoluments that lured him away from his top position at IBM. (Those details should surface when Tandon files its proxy statement later this year.)
But Tandon's team and Steinbrenner's highly paid Yankees have one more thing in common: They are playing in a tough division. Turning the company into a serious global competitor in a market dominated by IBM and cluttered with competition from established companies -- such as Compaq Computer Corp. and American Telephone & Telegraph, plus low-cost Japanese and Korean IBM-PC clone contenders now capturing market share -- is a tall order indeed.
"This is a company in transition," Wilkie said, "moving from key commodities [disc drives] into systems. We're trying to grow into the IBM-compatible world, and that means we have to shake the company's roots down to its toes."
Managing that transition is particularly difficult because Tandon also is struggling to preserve itself as a leading vendor of personal-computer disc drives; the company derives 27 percent of its revenue from IBM. Tandon's market share and profit margins have been eroding in the crush of Japanese competition. For example, margins for Tandon's floppy disc drives shrank from 30 to 20 percent in a matter of months.
That competition, combined with the continuing shakeout in the personal-computer industry, left Tandon's 1985 balance sheet a puddle of red ink, with a 30 percent sales drop and a net loss of $135 million.
"We didn't do a good job on the inventory controls, and we had manufacturing problems," Tandon conceded.
With his new management team and new corporate strategy, he insisted that the company is now poised for profitability.
"I will be extremely, extremely upset if  won't be a profitable year," he said.
In fact, Tandon and Wilkie predict that the company will reach the $1-billion-revenue mark by 1988 and derive more than half its income from the sale of its new IBM-compatible computer systems.
The core of Tandon Corp.'s strategy is to avoid competing directly in the PC marketplace and instead exploit a perceived gap in today's rough-and-tumble computer retail market. Most stores, locked in price wars of their own, have suffered tremendous declines in their personal-computer profit margins.
Tandon, which has extensive manufacturing expertise through its disc-drive operations, figures that it can position itself as a low-cost producer of IBM-PC-compatible machines for computer store chains -- such as Computerland and Entre Computers. The stores, in turn, would private-label the Tandon computers with their own names and sell them at far higher margins than they now get by selling IBMs, AT&Ts and Compaqs. (Indeed, Tandon already manufactures an IBM-compatible machine that Tandy's Radio Shack stores sell under a private label.) At the same time, the stores should still be able to offer their customers a price break.
"For an IBM PC-AT that might sell for $4,000 today, a Tandon-made private-label computer might sell for only $2,500," said Ranjit Sitlani, Tandon's vice president of strategic planning.
That potential $1,500 difference -- which would appeal to customers while preserving the retailer's profit margin -- is the wedge that Tandon hopes will give it access to the crowded personal-computer market.
"Clearly, there isn't a place for yet another brand name," Sitlani said.
"Tandon, I believe, is poised as maybe the only company that can respond to the need of the dealer channels in the marketplace," said Sparks. "What they need is the opportunity to make some margin, and we can provide that opportunity to them."
Sparks, who is enormously respected by computer retailers -- many of whom he helped put in business as either IBM-PC or Compaq dealers, or both -- insisted that "most of the larger [computer] store chains are destined to explore the private-labeling option because of marketplace pressures and the profit possibilities it could provide."
The fact that Sparks gives Tandon instant credibility in the dealer channel hasn't hurt either. "I don't have any trouble talking with the sales people at all," Sparks said. "We're a known quantity to the dealer."
Sparks also is setting up Tandon's dealer network in Europe, where the company plans to market personal computers under its own name because there is much less competition there. Tandon expects half its revenue to come from overseas within three years.
But the private-labeling approach is Tandon's most important gamble, and some analysts and retailers question whether it will pay off in time.
"We've looked at it and we think it's premature to talk about private labeling," said Enzo Torresi, Businessland's senior vice president of marketing. "I don't think the industry is ready for it."
Private labeling "is predicated on the belief that big business will accept those devices -- and that has yet to be proven," said James J. Edgette, executive vice president and cofounder of Entre Computers, the nation's second-largest computer franchise operation behind ComputerLand. "We've been studying this for a long time, and we haven't found any [of our dealers] jumping up and down saying, 'We need it. We need it.'
"Corona Data Systems, Columbia Data Products and other now-bankrupt companies tried it, and it didn't work for them either. There's some question it will even take place. Entre is not interested in [a private-label computer], but we're watching the situation closely."
So are ComputerLand, MicroAge and other computer retailers -- but Tandon has yet to announce a deal.
Even if a significant market for private-label machines does emerge, there are serious questions whether Tandon will be the company to serve it -- or whether the Japanese or Koreans will snatch up the opportunity.
"I would have a hard time betting against Tandon, but the Japanese represent certain levels of manufacturing quality and pricing that would give those guys a run for their money," said Seymour Merrin, a computer retail analyst with the Gartner Group.
Tandon insists that his company's "vertical integration" -- making everything from disc drives to circuit boards -- and offshore plants in Malaysia, Singapore and India means that, "From the cost point of view, we can be as low-cost as any offshore company can be. We have a cheaper labor base than any Japanese company." He also points to ex-IBMers Wilkie and Sydnes as managers to clean up the company's manufacturing-quality problems.
However, as competition intensifies, it may well turn out that companies with large-scale volume manufacturing and a history of tight quality control -- such as Japan's Matsushita or Korea's Daewoo -- could put the squeeze on Tandon.
"All the challenges I anticipated are here," Wilkie said. "But it's more important to do it right than to do it fast."
However, while Steinbrenner's stars on the Yankees can look forward to next season, there isn't always a next year in the personal-computer league. The personal-computer industry is watching to see if Tandon's all stars can make the company a winner.