Dataproducts Calls on Horseman to Put Marketing on Track
‘I want to get everyone’s antennas tuned to listening to the customer’s needs.’
Jack Davis
New chairman, CEO
It’s hard to fault Jack Davis’ track record. He’s the owner of Smooth Streaker, once Florida’s top quarter horse, and, earlier this month, Davis won a race with another horse he owns named Drifting Misty.
Although Davis’ record at the race tracks is enviable, it was his track record as a senior vice president with the computer and electronics conglomerate Harris Corp. that impressed directors of Woodland Hills-based Dataproducts. On April 30, they named him chairman and chief executive at an annual base salary of $350,012.
Davis ran Harris’ information systems operation in Melbourne, Fla., and helped build the company’s $800-million-a-year data processing and office automation products business. But now he faces what, many analysts believe, will be a much tougher challenge at Dataproducts--one that will require more than just the kind of good luck that blesses his horses.
Emerges From Retrenchment
Dataproducts, the nation’s largest independent maker of computer printers, is emerging from a painful retrenchment last year that cut its worldwide work force from 6,000 to 4,000. It lost $26.8 million in the year ended March 29, its worst ever, on revenue that fell 25%, to $353.8 million. The company, which last week reported a first-quarter profit of $2.5 million on revenue that declined 2.1%, to $84.4 million, hadn’t posted a quarterly loss in 14 years until last year.
The company faces tenacious Japanese competition, primarily from the huge electronics conglomerate Fujitsu, and also is dependent on orders from computer makers still stuck in a slump that has lasted far longer than anyone expected.
Slump in Market
In the past few weeks, market researchers say, orders for computer printers have slowed, deflating hopes that had grown late last year as orders rose.
The retiring chairman of Dataproducts, Graham Tyson, said Davis’ job will be “much more difficult than mine was. The environment is much tougher.”
Davis says he expects the industry to be sluggish all this year, but he believes Dataproducts can grow over the long term by becoming more attuned to customers’ needs. Davis already has surveyed the problems of the company’s customers. He also said that, when he sees an unattended telephone ringing in the office, he makes it a point to personally answer it because the call might be from a customer.
“I want to get everyone’s antennas tuned to listening to the customer’s needs,” Davis said.
It apparently wasn’t that way before. The company has a reputation among analysts for emphasizing technology over marketing, resulting in products that were solid but often late in getting to the market.
“It’s a slow, stodgy company,” said Rod MacIver, an independent, New York-based investment adviser and money manager who follows Dataproducts closely.
Most importantly, analysts said, Dataproducts lagged in getting into the laser printer business, introducing its first model in 1984.
Laser printers, which work like photocopiers to produce sharp images with a laser beam on photographic paper, make up the fastest-growing segment of the computer printer business. Dataquest, a San Jose research firm, estimates that the North American “page printer market,” which consists of laser printers and printers that work similarly to print full pages at a time, will about double its sales this year, to nearly $2.2 billion, and jump to $3.3 billion next year.
Second Only to IBM
The two other major segments of the industry are so-called fully formed line printers--Dataproducts’ biggest business and one in which it is second only to IBM, with an estimated market share of about 10%--and dot-matrix printers.
Tyson, who said he will retire next month, acknowledges that the company lagged in introducing products. He noted that he is much stronger in engineering and product development than in marketing.
Shy and soft-spoken, Tyson, 63, has been a patriarch at Dataproducts along with co-founder Irwin Tomash, 64, who served as chairman until 1980. Tyson had planned to retire last year.
Management Shuffle
Those plans changed in April, 1985, when Charles A. Dickinson, who had been expected to replace Tyson, quit as president and chief executive after a falling-out with Tyson and other board members over the way the company should be organized. Dickinson favored a more decentralized structure with the autonomous units he had built, whereas Tyson and the others favored a more tightly structured, consolidated company.
Tyson returned as chief executive and made some painful changes. He cut the company’s work force by about one-third, mostly through layoffs, and shut plants in Irvine, San Jose and Puerto Rico. Dataproducts’ employment has since grown 10% to 4,400 worldwide, including about 1,800 in Woodland Hills, Canoga Park and Chatsworth.
Tyson and other directors recognized that they needed someone with marketing knowledge when they started looking for a new chairman last fall. They blamed a lack of marketing savvy and Dataproducts’ decentralized structure for failing to recognize that the slowing sales early last year reflected a long-term trend.
Chosen From Field of 50
Davis was chosen from a field of 50 candidates submitted by an executive search firm. The board agreed to guarantee his base salary for two years and gave Davis options for 200,000 shares of stock that can be exercised at $15.37 1/2 a share.
Directors said that, even though Davis holds engineering degrees from Mississippi State and UCLA, they hired him largely because of the marketing knowledge he gained at Harris.
A native of Sardis, Miss., Davis, 48, worked for Harris 24 years. An 11-handicap golfer, he said he plans to move to Westlake Village to be near a course he likes. Although successful in racing, Davis said he and his wife may give up their hobby of raising horses--they now own six--once they move to California, in part because it takes too much time.
Still Stranger to Some
Directors said Davis has become familiar with the company faster than they expected. Staff members say he spends much of his time walking through the company’s offices and plants.
Part of the company’s strategy for the next few years was laid out in a study it did last year before Davis was hired. Davis said it largely involves working more closely with market research firms, computer equipment makers and equipment users to better understand the market.
Another plan is to sell more printers directly to users. Until now, the company has tended to sell its products to makers of computer equipment, who then resell them.
Seeks to Diversify
Dataproducts wants to diversify into fields such as airline-ticket printing equipment. Analysts speculate that the company, which has about $100 million in cash, also may consider some acquisitions.
Dataquest analyst David Glidewell said Dataproducts is expected to benefit from the expansion of its printer supplies business, which is growing rapidly as more companies install office computer systems. In addition, Glidewell said, Dataproducts is expected this fall to introduce a new type of ink-jet printer developed with Exxon that may prove to be a technical breakthrough. The printer’s primary innovation is that it uses, instead of a ribbon, a Crayon-like bar of ink that is melted and sprayed quietly onto paper.
Run by Founders for 24 Years
One of the difficulties facing Davis is that he is directing a company that, for the most part, has been run by its founders throughout its 24-year history. Tyson and Tomash will continue on the board of directors, and Tomash still has an office at the company where he works one or two days a week.
But Jack D. Steele, dean of USC’s School of Business Administration and a Dataproducts director, said Davis won’t be hamstrung.
“He’ll respect the board, Irv and Graham, but he won’t genuflect to them because they founded the company. He’ll be his own person and run the company,” Steele said.
