President Struggling to Reverse Firm’s Fortunes : Wang Labs Founder’s Son Feeling No Extra Pressure
Following in your father’s footsteps is never easy. It is even tougher when your father built a nearly $3-billion computer company from scratch.
But to hear Fred Wang talk, it is not that big a deal.
“I don’t think I’m under any more stress or pressure than anybody else seems to be at work,” said the 37-year-old president and chief operating officer of Wang Laboratories Inc.
“Having always worked for him, never having had a different father, never having worked for anybody else, I don’t know what it’s like--I can’t compare--to be in a different environment.”
But that doesn’t mean Wang isn’t under the gun: He must prove he can turn around a company that has had more than its share of hard times and a reputation for less-than-stellar customer service.
Wang, based in Lowell, Mass., was once a Wall Street darling. For over a decade its earnings increased more than 30% a year as its word processors became standard equipment in the secretarial suites of major corporations.
But the good times collapsed in its fiscal year 1985 when, beset by the computer industry slump and its own high operating costs, Wang’s profit slid to $15.5 million from $210.2 million the year before.
To shore up the company, the management under Wang’s father, An Wang, went through several rounds of layoffs, pay freezes and other cost-cutting measures. But things got worse instead of better: The company reported a loss of $30 million in the quarter ended Sept. 30, 1986. Its stock price and its image both sagged.
Fred Wang was named president in November, 1986, and almost immediately took action. He eliminated 1,000 jobs--on top of the 1,600 cut in 1986 and a like number the year before--and reduced salaries by 6% for all U.S. employees.
But things didn’t improve quickly. In fact, they appeared to get worse. A little more than a month after he took office, the company announced a loss of $78.6 million in the quarter ended that Dec. 30.
Morale among the 30,000 Wang employees probably hit its nadir when that loss was announced, he recalled in an interview here.
“We said OK, we’ve really got to get the place turned around, get people focused in on, basically, expenses, getting more new orders in,” he said.
The tonic finally took its effect in the quarter ended March 31, 1987, when the company reported a profit of $5.9 million. But it still ended its fiscal 1987 a quarter later drenched in red ink--$70.7 million worth of it.
Wang also changed the structure of the company, letting out some slack in the tight reins his father held by giving divisional chiefs more authority. And he launched an innovative advertising campaign in which actors posing as Wang employees boast in computerese about their products.
Since the profitable quarter ended March 31, 1987, Wang has recorded earnings in three more quarters, including $34.1 million in the period ended Dec. 31.
“The mood has turned around, and I think we’ve done some things not only on the expense side but also on the advertising side and really on the management side to get things moving in the positive direction,” he said.
An Wang, a Chinese immigrant who founded the company in 1951 as a maker of custom electronics components, has denied speculation that he made his son the president because of the company’s problems. Instead, he said, the younger Wang was ready for more responsibility. An Wang remains chairman and chief executive officer.
And Fred Wang denies that he has made any real departure from the way the company was run by his father, universally called “doctor” in deference to his Harvard doctorate in physics. Instead, Wang says, he has managed to communicate better with the employees to battle corporate inertia.
“What sometimes gets lost in this Fred vs. Dr. Wang issue is that a lot of the changes he has been a proponent of for some years anyway, but a lot of the people said, ‘We did this five years ago, that’s the way we are going to do it.’
“Where he always had a grand strategy for the organization, he kept most of it in his head. . . . “
Wang says he never set out to work at the company, let alone run it. But when he graduated from Brown University with a math degree--after changing majors several times--he had little career direction.
“So here I was, 21 years old, June of 1972, unemployed,” he said.
But since he had learned to write computer programs at Brown, he said, he decided to work at Wang.
After going through the ranks in the programming department, Wang moved into marketing. Later, he headed the research and development operations, and served as corporate treasurer. He also is on the board of directors.
Now, at the helm, Wang faces several challenges. In addition to maintaining profitability, he must manage the company’s transition from a maker of word processors to a broad-based seller of minicomputers, data networks and information storage and management tools, finding a niche for it alongside the giants of the computer industry, International Business Machines Corp. and Digital Equipment Corp.
Wang says he is not talking about sheer size. Instead, he wants Wang Labs to be viewed as an industry leader in other areas, such as technology.
The ads are part of the company’s image-raising plan. He said they are designed “to change the nagging image of our being a word-processing-only company to one of being a computer company that specializes in the office.”
They also serve another purpose: “Our sales people had gone through one hell of a year, with the industry slowdown and our own internal problems. We wanted them to be seen as the hero of the ad program,” he said.
