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Acxiom's growing pains.

ACXIOM'S GROWING PAINS

It's easy to be impressed by Charles Morgan Jr.

The 48-year-old CEO of Acxiom seemed unperturbed swiveling in a chair last week talking about the growing pains of the $90-million database company he has run for 15 years.

While Morgan is the picture of competency, Acxiom's stock is troubled.

Over the past year the stock slid from a high of $24 a share to a low of $11 per share. It's currently hovering at $13 a share. Morgan's personal stake in Acxiom stock dropped nearly 50 percent - or $12 million.

Some say the company has lost part of its focus and workers are adrift or overworked. A worker contacted last week who is leaving for California says she spent nine months in a software rewriting section getting paid $25,000 a year to just sit around.

"Every now and then, we'd have something to do," says Polly Jenkins, 27. Bored to distraction even though she had repeatedly asked for work to perform, Jenkins is quitting. "Eight hours a day of nothing lasts forever."

A Hendrix graduate, Jenkins tried for years to get on at Acxiom because many of her friends worked there and the company had an excellent reputation. But confined to Acxiom's BSA division located in New Jersey which has lost money and undergone numerous problems since its purchase in 1986, Jenkins was seriously disappointed.

Phil Bartos, an Acxiom SVP, says Jenkins experience is unique and reflects long-distant management problems. Bartos says he would be "very, very surprised" if it wasn't an isolated case.

In contrast, another ex-Acxiom employee says workers in his department often put in 80 hours a week handling customer accounts.

"People were under a lot of stress," the employee says. Committed to maintaining Acxiom's reputation for 24-hour-a-day software support, they worked as long as it took.

Both are differing sides to an Acxiom that has grown rapidly in the past four years, increasing revenues from $30 million to $90 million, quadrupling in employee size and extending its reach across the Atlantic.

"It's just a time of great changes," Morgan says of the world economy and Acxiom's place in it.

Acxiom's growth explosion started in earnest when the company went on an expansion binge in December 1986 gobbling up companies and tripling its total employees in less than two years.

This year the brakes are on at 21-year-old Acxiom, the buying spree is over, and losses at some operations have been written off. The stock has taken a beating, and a recent earnings report issued late last week had third quarter earnings down 18 percent.

Growing, Growing, Growing......Grown

A heralded growth stock that went public in December 1983, Acxiom's revenues and earnings have climbed steadily since 1985. Forbes magazine repeatedly picked Acxiom among "The 200 Best Small Companies In America."

In 1990, after five years of receiving the award, the company didn't make the Forbes list.

In the first quarter of 1991 earnings were way off - 60 percent lower than the year before. Overall, annual earnings are flat.

What happened to knock the company off track?

Acxiom went on an acquisition spree when President Phil Carter, an IBM regional manager, joined the company in 1986. Under Carter the company had within a year and a half increased the number of employees from 584 to 1,405.

Before the expansions, the company was confined to its Conway headquarters. By July 1988 there were branches in Ocean, N.J., Philadelphia, and two locations in England.

Not surprisingly, some of the moves didn't work out as planned.

"They've dropped the ball and will admit it," says Stephens Inc. analyst Dathan Gaskill who is bullish on Morgan, the company and the stock.

In particular, BSA Inc.'s full-service catalog division in Ocean, N.J., lost money and was a headache to run. Despite the construction of $6 million worth of warehouses, Acxiom shut it down after three years.

According to Gaskill's research reports, Acxiom's revenues are getting squeezed by a variety of factors: consolidation costs at Acxiom-subsidiary Modern Mailers in Philadelphia; the closing of BSA's 100,000-SF warehouse operation in New Jersey; relocation expenses in the England operations; an expected $8-10 million contract with Meredith Publishing that fell through; cutbacks in national bank business that comprises 20-25 percent of Acxiom's billings.

"Two years ago you would point to Acxiom and say, |We've got the biggest, best bank in the U.S. (Citicorp) and one of the best banks in the world as a primary client," says Gaskill. Today, struggling Citicorp's financial woes are well known.

A postal increase due next month will hurt Acxiom's catalog-related business, and the recession has already crunched advertising-based accounts.

"They've had a tough year, a real tough year," says Gaskill. But he's confident they're up to the challenge. "They've got an excellent management team."

On the up side, Dathan's latest earnings figures project Acxiom's 1992 earnings climbing by 25 percent to 30 percent, a healthy growth rate.

An Empty Warehouse

A symbol of excess growth in those expansion years is the 93,000-SF CONFUL building located adjacent to the Conway airport, separate from Acxiom's main campus.

The warehouse was built to house up to 150 workers by early to mid-1990 performing BSA catalog fulfillment operations. But Acxiom shuttered the operation last year. Today approximately 50 research and development, corporate marketing and other employees work inside part of the building.

Morgan says the company probably will convert the warehouse for computers processing data-management because the main corporate buildings are already overtaxed. And as for the mistakes that were made in purchasing BSA's catalog division, Morgan is philosophical.

"We are probably no more, no less brilliant than any company in their corporate life," he says. At the time, the BSA project seemed like a great idea.

Acxiom's ups and downs are nothing new. Morgan says the company spent $1 million on a venture in 1983 exploring the possibilities of electronic mail that was a waste.

"If we'd been a public company then, that would have been looked at as a mistake," he says.

"Generally, acquisition strategies are more likely to fail than if you grow it yourself," says Morgan of the lessons learned over the past few years. "You can either build it or buy it. We have been more successful building it."

Today, the buzz word at the company is focusing on "core competencies," i.e. Acxiom's primary Conway data-management operation that grew better than 25 percent last year in spite of the general economic slump.

In The Waiting Room

Acxiom's main corporate campus is stylishly high-tech with is clusters of subtle four-story blue and brown buildings. Inside the main entrance-way a receptionist sits behind a wooden desk surrounded by tall indoor plants perched in the thatched baskets. It's California chic; Silicon Valley meets Faulkner County.

Across the front of the receptionist's desk is an electronic sign flashing messages.

"Customers are the key to our success."

"Welcome."

The company's stock price is also flashed periodically, as well. For years a symbol of the company's good fortune as it climbed steadily upward, when the stock price began dropping this year, some employees were worried.

"A lot of people noticed the stock drop," says one former employee. "Even the people within the company told me they were real nervous about that."

Last summer, analysts were predicting Acxiom's stock, then trading at $20-plus per share, would hit $30 a share possibly within a year. But when the company's earnings took a bath in the first quarter of 1991, the growth stock took a tumble. And with it probably a lot of growth stock investors.

Asked last week he thought the stock has dropped, CEO Charles Morgan gives an answer stock brokers often give when frustrated by a stock's movement.

"I know exactly why. There are more sellers than buyers," Morgan says with a tinge of sarcasm.

The private company that was once "like a family," as one employee put it, is now a major corporation with 2,000 employees, and public scrutiny of the stock price is a sign of investor confidence, or lack of it.

Right now, growing pains are in order.

PHOTO : COOL AND CONFIDENT: Acxiom's CEO Charles Morgan Jr. says the company is still on track to becoming a worldwide marketing firm. But this year earnings are flat and last week's quarterly earnings declined 18 percent.

PHOTO : THE PICTURE OF CONFIDENCE: Acxiom CEO Charles Morgan Jr. has helped build the Conway-based data management company for the past 15 years to the 2,000 employee, $90-million operation it is today.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:database company's expansion growth and problems
Author:Walker, Wythe Jr.
Publication:Arkansas Business
Article Type:company profile
Date:Feb 4, 1991
Words:1427
Previous Article:Arkansas Business of the Year 1990.
Next Article:Blue Cross has power of numbers.
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