Shake-Ups : General Automation Counting On Management Reshuffling to Get Computer Firm Back on Line
General Automation announced Friday a major management reshuffling in which longtime chairman, president and chief executive Leonard N. McKenzie will step down from those posts to become the firm’s vice chairman.
General Automation named two New Jersey businessmen who are also company directors to fill McKenzie’s former jobs and also tapped a new chief financial officer and corporate secretary.
The management changes come at a time of stumbling financial results for the Anaheim maker of small business computers, but company officials stressed that recent losses were not a major factor in the decision.
McKenzie, who has headed the Anaheim computer manufacturer since 1980, said he initiated the changes because he wanted “to bring some new talent” to the firm’s top management. Alexander W. Giles, 53, a partner in a New Jersey management consulting firm, was named chairman. Giles will not serve full time in the chairman’s post and has no plans to relocate to Southern California.
General Automation’s new president and chief executive is Michael J. O’Donnell, 33. O’Donnell has resigned as chairman of Eastek Corp., a New Jersey electronic document processing company that he founded, to take the new job. He plans to relocate to Southern California.
Giles and O’Donnell both joined the company’s board in June.
In announcing the changes Friday, McKenzie said the moves are intended “to position us for some well-managed aggressive growth. I felt very strongly that we need to bring in some talent to help the company go forward.”
As vice chairman, McKenzie said he will concentrate on sales, marketing and developing new business opportunities, areas he described as his “real strengths.”
For the nine months ended March 31, General Automation lost $2.2 million on revenue of $37 million, contrasted with earnings of $361,000 on revenue of $29.7 million a year earlier.
Earlier this month, the company announced it is selling its Parallel Computer subsidiary to British-based Integrated Micro Products for an undisclosed sum. The Parallel unit, acquired 16 months earlier, has contributed a “significant portion” of General Automation’s losses this year, company officials said.
McKenzie said in an interview that the recent losses “were not really a factor” in the decision to realign management. In a company statement, however, McKenzie noted that the new management “will be addressing profitability and financing issues right away.”
In the interview, McKenzie said he has “been after the board to help me bring in these fellows (Giles and O’Donnell) for about a year. I initiated this.”
Giles said his main task will be “re-establishing the company with the investment community.”
Interest Lagging
In the past, General Automation’s stock has been followed by a handful of Wall Street investment firms, but interest has lagged as the company’s stock price has sagged. The stock traded at between $4 and $5 before last October’s market crash but has sold recently for between $1.50 and $2.
Giles is familiar with Wall Street’s workings, having served as president of the New York investment bank Brean Murray Foster Securities from 1982-84. He was senior vice president and co-chief operating officer of Long Island Lighting from 1985-86; president of Scusa Inc., an electronics services company, from 1984-85; and chairman and chief executive of Modular Computer Systems, a computer company, from 1976 to 81. He has also held various other management posts.
O’Donnell is an accountant who formerly worked as executive vice president and chief financial officer of the Ultimate Corp., a New Jersey-based computer reseller that competes with General Automation.
O’Donnell left Ultimate in mid-1986 to found Eastek, a company involved in developing optical disk technology. In July, Eastek filed a petition under Chapter 11 of the U.S. Bankruptcy Act to reorganize its debts and protect itself from actions by creditors.
In other management changes, General Automation named company director John B. Conlan corporate secretary. Conlan, 56, an attorney, replaces Dennis H. Nystrom, who left the company in April to return to his law practice in Detroit.
The company also said that Donald W.S. Rutherford, 48, will return to his former position as vice president of finance and chief financial officer. Rutherford served in those positions from March to June, resigning at that time for personal reasons.
GENERAL AUTOMATION AT A GLANCE General Automation is an Anaheim-based manufacturer of small and medium-size business computers for such specialized markets as financial services, health care, hotel management and government agencies. Year ends June 30 (July 31 in 1984-85)
(in millions) 1988 1987 1986 1985 1984 9 months Revenue $37.0 $42.8 $29.1 $52.8 $75.5 Profit (loss) ($2.2) $1.63 $2.14 ($8.0) ($3.3)
Assets $25.8 million Shares outstanding 5 million 52-week price range $2.125-$1.375 Friday’s closing price (Amex) $1.625, off 12.5 cents Chief executive Michael J. O’Donnell
