With four straight years of net losses, a maturing informatics industry, a 54% of its business still coming from hardware sales that are drying up, and, moreover, an image as an ever more ailing company, Compagnie des Machines Bull SA’s chances of emerging from its crisis in its current form are less than good. And following Bull’s press conference last week to announce its 1992 results, it was not altogether clear that its new chief executive Bernard Pache will be the man to lead the company out of the crisis. Why not? The first and more important reason is that he is likely to be transferred out of Bull within the next few months, along with other chief executives at state-owned companies, when the rightist coalition almost inevitably takes over the government from the Socialist Party after the legislative elections this month. A particular outcome of democratic elections is often widely forecast, but never in any modern democracy has a win for the opposition been treated as such a foregone conclusion as is now the case in France.
Mire
Secondly, Pache’s style does not lend any air of the dynamism needed to steer Bull out of its current mire. Indeed, Pache’s first press conference since his appointment last summer was a study in contrasts with the style of his predecessor, Francis Lorentz. The mustachioed, slightly jowly Pache, who one Bull employee characterises as a great poker player, was spare in his responses to questions. At one point he answered simply no, with no further explanation where, in fact, one might have been warranted. It was a study in contrasts with Lorentz, who often became impassioned in defending his company and strategy, repeatedly marshalling data to fashion a credible response. The only change Pache indicated in Lorentz’s strategy was an allusion to studying an expanded alliance with existing shareholder NEC Corp. to share the costs of either personal computer development or manufacture. Ironically, Lorentz’s disagreement with then-Prime Minister Edith Cresson over having NEC as a shareholder was said to be a prime reason for his departure. As for the rest, he said, Bull will continue to support its proprietary GCOS 7 and GCOS 8 machines; to develop its systems around standard Unix and micro systems; and to accelerate its software and services (system integration and facilities management) activities. We will continue to defend the place of our proprietary mainframes, even though we are well aware of the irreversible erosion of this part of the market. Our objective is to maintain the quality of the offering, he said.
By Marsha Johnston
As for the Unix business, Pache was asked what Bull plans to do to counter IBM’s development of a symmetric multiprocessor line of PowerRISC workstations that is separate from the line it is developing with Bull. Pache had no response, other than to say, we’re talking to IBM. In a separate interview with Reuters, Axel LeBlois, president and chief executive of Bull North America and Pacific, said Bull will notably expand its own version of Power RISC – the DPX20 range. He added, however, that hardware sales revenue this year would be fairly static as lower prices offset higher volume. Bull’s micro business, namely Zenith Data Systems, came under heavy fire from French journalists at the conference for being a loss leader in a market where making money has become more and more difficult. An insider at Zenith noted that the company is really a sitting duck target, with highly visible personal computer products in a relentless price war, which is also an acquired division with a different brand name that is not French. In 1991, Zenith recorded a net loss equivalent to $290m at the current rate of exchange, or over half of Bull’s total net loss of $589m. Despite Zenith continuing to represent an unspecified percentage of Bull’s losses for 1992, Pache would not commit to any drastic changes in that area. A Zenith spokesman said that, in Europe, the company is signficantly ahead of last year’s numbers, in units and value, for first two months of 1
993. Bull’s 1993 sales in services and system integration in the US, Canada and Mexico should rise 25%, Leblois told Reuters. In 1992, they rose 22%, he added. Furthermore, service and system integration in North America made an operating profit in 1992, he said, declining to give a figure.
Basket case
North America accounted for 20% of Bull’s $5,440m 1992 turnover, according to data released with group accounts last week, which showed a net loss of $847m and an operating loss of $409m. Leblois said his division would continue to benefit from the recovery of the US economy and its performance was a leading indicator for the group as a whole. Optimistic assessments aside, the fact is that Bull’s role as a hardware manufacturer continues to weigh financially on its potentially more profitable ventures. In systems integration, for example, Gartner Group rates Bull fourth in Europe and sixth in the world, which is a fact that continually gets lost amid all of Bull’s other bad news – and the French authorities seem to be oblivious to how badly the regular injections of state cash to prop Bull up play in the outside world, causing the company to be regarded as a corporate basket case that would no longer exist if it were subjected to the normal commercial disciplines faced by all its foreign competitors.
