Perot Gets Investors’ Vote as Offering Leaps

Former presidential candidate H. Ross Perot has a new attention-grabbing chart to show the public: a one-day return of 172% that added $800 million to the Texan’s net worth.

Perot’s Dallas-based Perot Systems gained that much Tuesday after going public at $16 a share, driven by the popularity of high-technology stocks and the chief executive’s reputation as an astute, if unusual, businessman. Shares in the computer services company closed at a lofty $43.50 on the NYSE, putting a $1.4-billion price tag on Perot’s 38% stake. “That’s a testament to the name recognition of Ross Perot and people’s feelings about him as a businessman as opposed to a political figure,” said analyst Ken Fleming of Renaissance Capital, which tracks and invests in initial public offerings.

Perot Systems is small next to such competitors as Computer Sciences and Perot’s old company, Electronic Data Systems, making the sudden run-up even more impressive. With profit of $28.2 million, or 37 cents a share, for the nine months ended in September, Perot Systems is suddenly trading at more than 80 times its recent earnings. That’s nearly triple the average of the Standard & Poor’s 500 index.

The surge surprised even Perot, who returned to day-to-day management of the company and slashed costs 14 months ago.

“I’m very proud of all the people who have helped to build the company. They’ve done a wonderful job,” Perot said in an interview after his plane touched down back home in Texas.

About 90% of the 10-year-old company’s 6,000 employees have an equity stake, and Perot said the offering was designed to reward and motivate the work force. “The only reason we went public was to light up the scoreboard. Now they’ll be working really hard.”

Perot said he has no reason to sell any of his own shares. After all, Forbes already ranks him No. 68 on its list of the richest Americans, with an estimated $3.7 billion in hand last year.

“If you see any action, once I cleared it, I would be buying stock, not selling,” he said. Perot predicted 24% profit growth in the coming year, even though Perot Systems isn’t looking to get rich hunting down year 2000 bugs. Too much investment required in those projects, he said, and “after the year 2000, you won’t have anything to do for 100 years.”

Instead, the company plans to deepen its relationships with customers, avoid formalized bidding for contracts and possibly start a venture capital arm with its new cash. It also plans to get into electronic commerce “aggressively,” with an announcement scheduled for Tuesday, Perot said.

Small investors, typically shut out of hot initial offerings, clamored for shares of Perot Systems. About 735 benefited by getting 100-share lots from online broker E-Trade Group, which chose Perot as its fourth stock to help underwrite.

E-Trade’s previous issues were purer Internet plays, and Perot’s performance shows that the market is wild “not just for the Internet. It’s the whole technology-enabling force,” said E-Trade Vice President Lisa Nash.

One of the larger underwriters, which buy new shares and resell them to the public, had an even more compelling reason for getting involved. The parent of Warburg Dillon Read securities, UBS, provides more than 25% of Perot Systems’ business.

Perot is known both for building EDS into a business for which General Motors would pay $2.5 billion and for being so difficult to deal with that GM paid another $700 million to get rid of him when he was a member of the board.

Now that the 68-year-old Perot is again with a publicly traded company, don’t look for his autocratic management style to change. Perot Systems’ prospectus notes that under the company’s bylaws and charter, Perot’s shares give him the ability to block any merger. And other investors don’t have the right to call a company meeting or amend the bylaws without an 80% vote.

Perot declined to discuss any lingering political ambitions and said he doesn’t plan to become a spokesman on economic issues.

“I’ll just tend to business,” he said. “I’ll be here as long as I need to be here.”

It’s just that simple.