His Initial Success May Be Tough Act for Perot to Follow

Friends describe Henry Ross Perot, the Texas computer entrepreneur who founded Electronic Data Systems, as a man in a hurry. Perhaps that helps to explain his infatuation with initials.

Last week, when he unveiled his newly created computer systems company, Perot Systems, the jug-eared billionaire pointedly noted that “P.S. stands for ‘more to follow.’ ” And the family partnership that is bankrolling the venture is called HWAG, for “Here We Go Again.”

In an interview, H. Ross Perot joked that his personal jet’s pilots told him that they were creating a new company of their own--IAT Associates, for “It’s About Time.”

“They were tired of ferrying around an old guy out of work,” said the pint-sized 58-year-old with the bigger-than-life image.

But now many analysts are saying MNTT--”Maybe Not This Time”--about Perot’s ambitions.

They said the stock market overreacted last week when the initial burst of publicity over Perot’s new venture knocked the wind out of General Motors’ Class E shares, whose dividend stream is tied to the performance of Electronic Data Systems.

And while Perot said the new venture will initially operate as a nonprofit concern, he clearly hopes to duplicate the success he had and build another computer services giant like EDS.

“To me, it looks like a huge mistake, almost as if though he is on a vendetta,” said Arthur Davis, an analyst at Prescott Ball & Turben. Perot has been on the warpath against GM, which he considers too bloated and bureaucratic, since shortly after it bought EDS in 1984. The auto maker declined all comment on Perot.

Added Terry Quinn, a software and systems analyst with Drexel Burnham Lambert: “You have to remember Perot built EDS when there weren’t any real competitors out there. Now, there’s not only EDS but also a host of other systems specialists.”

And Alfred Tobia, an analyst with Mabon Nugent, doubted whether Perot’s small venture would be able to compete for the huge contracts EDS can attract with its armies of people and extensive proprietary computer network. “Perot has got to get a lot more equipment and a lot more people before he can bid on a large-scale systems integration package,” he said.

Perot Systems will operate as a nonprofit company for at least the next 18 months to conform with Perot’s separation agreement with GM.

Will Never Be Merged

Another novel feature will be the company’s ownership structure. Though Perot is putting up 100% of the estimated $20 million in new capital, over time 60% of the company’s stock will be given to its employees--”the people who build it,” as Perot put it. When asked for detailed information on how quickly the stock will vest, Perot was vague.

“This will be an independent company,” he vowed. “It will never be sold or merged.”

“A computer services company runs on brains and wits,” he continued. “It doesn’t need capital. I would describe my new associates as people who have lived in the field. These are not headquarters generals--they are battlefield generals.”

The eight officers Perot hired last week all came from EDS and included three corporate vice presidents. Still, analysts noted that EDS, which had $4.4 billion in revenue last year and employs 48,000, is known for its depth of management. “EDS has a tremendous pool of talent. They’re 10 people deep in some positions,” Quinn said.

Perot Systems’ first contract was a 90-day, $500,000 study on improving the efficiency of the U.S. Postal Service. Although it is a nonprofit contract, it could lead to riches down the road if it leads to systems development work.

Perot himself downplayed his new company’s initial prospects. “I consider EDS to be a great company. They’re so big and we’re so little,” he said.

Not Always Successful

Still, he said his goal is to eventually work on “huge, complex jobs that, if done well, can make a difference. . . . We’re thinking of building a company over 20, 30, 50 years.”

But skeptics noted that while Perot’s can-do spirit sometimes works miracles--the celebrated mob assault that he financed on an Iranian prison in 1979 to free two employees, for example--some of his schemes have not panned out.

In 1974, for example, he lost $60 million when two Wall Street brokerage firms he controlled went out of business. Perot first became involved with them in 1970 when he thought he had a solution for the paper work that was overwhelming many Wall Street firms. Perot later commented to an interviewer: “I got suckered.”