How business, doctors and journalists prey on your food anxieties I

One of the great success stories of the 1980s,
Comdisco must painfully adapt to a world where
mainframe computers are replaced by PCs-<strong>and</strong>
where locker-room manners are politically incorrect,
Jack Slevin's
ordeal
By Matthew Schifrin
Comeisca Chief Executive Jack Slevin
Has he matured enough to face Comdisco's sobering challenges?
JUST ocEaatEA .Reco Jack Slevin fell
into the top job at Comdisco, Inc
.t but his promotion was scant cause for
ceiebration . The big (1994 re,;enues,
52 .1 billion) computer leasing cornpanv's
founder <strong>and</strong> guiding light,
Kenneth Pontikes, had just died of
colon cancer at age 54 . Pontikes was
morc than a boss . He was idolized,
<strong>and</strong> even todat' some staffers get mist_r-eyed
chen diev t:ilk about him .
Following an act like that is bad
enough . &en worse, Slecin took over
a company that's in the midst of
reinventing itself in the face of a fastchanging
computer market . At the
same time he is trying to assure investors
that Comdisco still justifies a lofq•
stock price that recently hit 24 times
earnings .
In short, Comdisco is delicatel~poised at the point of change
.
Over a quarter of a centun' Comdisco
had grown up «•ith the computer
indusrrv, chiefly bc leasing IBM
mainframes to users aw «ou1d rather
rent than own- But tinus chaneed .
Comdisco faces rough competition
Ermn manufacturers like tsNi, schich
does its own leasing, <strong>and</strong> from giant
leasing competitors like GE Capital
<strong>and</strong> st&7 Capital . Mean.vhile, corporations
are converting en masse from
mainframes to inexpensire personal
computers linked in nenaorks .
Little ofthis is vet obcious in Comdisco's
numbers . Its core <strong>business</strong> has
continued srosving, though more
slowlv : Last t'ear it added a net $1-6
billion in new leases to its portfolio,
compared with increments of 51 .7
billion in 1993 <strong>and</strong> S2 bilLion in 1991 .
Comdisco's reported earnings,
too, have held up . In 1994 it shoceed
earnings of $1 59 million ( before taxes
<strong>and</strong> a $70 million 1B1a litigation settlement
charge), up from $144 million,
pretax, on slightlp higher revenues
than in 1993 . In the first hatfof 1995,
its pretax profit is up another 4% .
Probe beneath the numbers, <strong>and</strong>
the rosv glow tedes . To see whv, you
must underst<strong>and</strong> hoss• computer leasing
a'orks . Comdisco has been essentiall}•
a specialized financial companv,
making its monev in nvo svars :
1) On the spread benceen its cost of
money <strong>and</strong> the implied interest rate
embodied in its leases . That is, it
borrows monev to brry equipment at
lower rates than it charges customers .
82 Forbcs nAueust 14,199,
1146673340
http://legacy.library.ucsf.edu/tid/agf97d00/pdf