TIME: Almanac 1993/TIME Almanac 1993.iso/time/121189/12118900.023

Text File | 1992-09-23 | 3.6 KB | 71 lines

                                                                                BUSINESS, Page 76

A Golden Boy's Woe: "I'm Virtually a Slave"


    When he burst upon the takeover scene in the early 1980s,
Asher Edelman seemed to have a magic touch. Bright, brash and
hyperconfident, he reaped more than $40 million in instant
profits for himself and his investors by raiding and liquidating
two dreary companies: Management Assistance, a computer maker,
and Canal-Randolph, a real estate firm. Suddenly superrich, the
Bard College graduate, reared on Long Island, N.Y., bought
fashionable residences from Sun Valley to Switzerland, a 100-ft.
yacht, a personal jet and a modern-art collection today rumored
to be worth $100 million.

    The battle cry of all raiders is to "maximize shareholder
value," but few of them blew the trumpets like Edelman. In 1987
he taught a business course at Columbia University that he
aptly dubbed "The Art of War." Edelman offered $100,000 to any
student who could find a mismanaged company for the professor
to chew up. Columbia nixed the offer, but Edelman's image as a
buccaneer flourished. That same year he served as a role model
for the fiendishly greedy Gordon Gekko in Wall Street. "I
hunched in my seat as I watched that movie," says Edelman. "I've
never committed any crimes."

    Even so, Edelman, 50, has plenty of reasons to hunch. Since
1986 he has launched hostile raids on ten large corporations
and nine of the bids have failed, though Edelman has collected
some greenmail for quitting the attacks. He managed to capture
one of his prey, the Ponderosa restaurant chain, but resold it
without a profit.

    When Edelman has tried to operate companies rather than
simply auction off their parts, the results have been just as
dismal. Example: Datapoint, a San Antonio-based minicomputer
maker. Since Edelman took it over in 1985, the company has gone
through three presidents and $135 million in losses. Yet he has
reaped millions of dollars in personal fees by aggressively
playing the stock market with Datapoint's cash. Another
Edelman-controlled firm, Intelogic Trace, a computer-servicing
business that was spun off from Datapoint in 1985, has seen its
annual profits plummet from $20 million in that year to $179,000
in fiscal 1989.

    Edelman got a taste of his own tactics last September, when
Manhattan lawyer Martin Ackerman launched a proxy war for
Datapoint. Edelman responded by entrenching himself more
deeply. In a two-day blitz of stock buying, Edelman boosted his
stake from 10% to 40%, largely by purchasing stock with cash
from Intelogic Trace. Edelman won, but pride had its price:
Datapoint shares have fallen an additional 25% in value.

    Because Edelman feels that U.S. attitudes toward raiders
have become too hostile, he now prefers to stalk European game.
Yet his magic touch is fading. In June, Edelman made a failed
bid for Storehouse PLC, a British retailing giant. Since then
Storehouse's profits and stock price have plunged, wiping out
some 35% of the value of Edelman's stake.

    What could Edelman teach students about his current woes?
For one thing, stock-market investors and Edelman's corporate
prey have become more sophisticated during the 1980s. Just as
important, it is far easier to liquidate a company than to
operate it. Seeking relief, Edelman said last week that he may
finally sell at least two of his collapsing companies, including
Datapoint. He told TIME that in future takeovers he will let
someone else occupy the executive suite. "It looks like I have
this wonderful life," he says painfully. "But I'm virtually a
slave to these companies."