Entertainment Merger Mania : PROFILE : Will Westinghouse’s Chief Executive Be Remembered as ‘Err Jordan’?

Is Westinghouse Electric Corp.’s $5.4-billion purchase of CBS a slam dunk or an air ball for Michael Jordan?

The 59-year-old Westinghouse chief executive--subjected to a fair amount of teasing over sharing his name with the basketball superstar--has been looking to score big ever since he was recruited to turn around the ailing industrial conglomerate in 1993.

The former investment banker, management consultant and PepsiCo executive has cut and slashed at Westinghouse, most recently selling off the Pittsburgh-based company’s real estate divisions. But despite those cuts, Westinghouse stock has failed to climb out of the $12-$15 range.

“He has helped put out some fires and stabilize the company,” said Sheldon Grodsky, director of research for Grodsky Associates in South Orange, N.J. “But Westinghouse likes to have one big disaster a decade.”

In the 1970s, the company’s nuclear plant business was rocked by volatility in the price of uranium, triggering a long and costly court battle with customers and uranium producers. In the 1980s, Westinghouse launched a financial services business and lost about $5 billion when the commercial real estate market plunged.

Will the CBS acquisition be Westinghouse’s disaster of the 1990s? Will Michael H. Jordan go down in history as “Err Jordan”?

Friends and business associates, such as PepsiCo Inc. Chairman and Chief Executive Wayne Calloway, doubt it, insisting that Jordan is one of the smartest people they know. “He’s a superb strategic thinker who led some of PepsiCo’s fastest-growing businesses,” Calloway said.

But unlike the deal announced Monday between Walt Disney Co. and Capital Cities/ABC Inc., the combination of industrial behemoth Westinghouse and the third-rated television network is not exactly bursting with obvious synergies.

Westinghouse is a hodgepodge of furniture, nuclear power, radar and refrigeration operations, along with its television and radio stations. But the broadcast division is the most profitable of them all.

“It may be that Michael Jordan has finally come to the conclusion that he can’t solve these problems in the existing company, so he’s going to bet the farm to come up with something he thinks is a good bet for the next 50 years,” said Westinghouse investor Robert Monks of Lens Inc. in Washington.

If that is indeed the bet, it is probably a good one, because Jordan is the type to consider all his options carefully before coming to a decision, said Chuck Ames, who worked with Jordan for a decade at McKinsey & Co. in Cleveland and later at the New York investment firm Clayton, Dubilier & Rice.

“He’s a very thoughtful guy,” Ames said. “He won’t shoot first and ask questions later.”

In the office, Jordan is described as informal, asking co-workers to call him Mike and preferring not to work on weekends. That is when he likes to play golf or go backpacking in the mountains of New Mexico with his son, one of two grown children.

Proving that he is not tied to his office, Jordan and his wife, Kathryn, maintain homes in Santa Fe and Dallas as well as Pittsburgh. Jordan is an active chairman of the United Negro College Fund’s board of directors and also serves on the boards of the University of Pittsburgh Medical Center and several corporations.

Although Jordan’s corporate experience prior to Westinghouse was concentrated on marketing and financial matters, he studied chemical engineering as a young man, earning a bachelor’s degree from Yale and a master’s from Princeton. He earned certification as a nuclear engineer during a four-year tour in the Navy in the early 1960s, which included a stint at the Westinghouse Bettis Atomic Power Laboratory near Pittsburgh.

Now analysts expect Jordan will be selling off some of Westinghouse’s traditional units to pay for CBS and focus the business. He has already cut 7,200 jobs and plans to cut 1,000 more.

But, as Ames says, turning Westinghouse around is “one hell of a challenge, and Mike finds that attractive.”

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Westinghouse Stock

Quarterly highs, except latest:

Tuesday: $14.875, up $1.25

Source: TradeLine