Word: rolmes
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When executives do venture into new fields through mergers, they are now more likely to adopt a hands-off policy toward the acquired companies. IBM last year completed the $1.9 billion purchase of Rolm Corp., a Silicon Valley maker of telecommunications equipment. The button-down computer giant has since left its freewheeling subsidiary largely alone. "We didn't come here to fill up the swimming pool with gravel," an IBM official assured Rolm employees, who have happily retained their corporate hot tubs, saunas and water-polo team. General Motors has vowed to pursue a similar strategy with Hughes Aircraft, which...
Previous computer-telephone mergers, such as IBM-Rolm, have been unsuccessful, but AT&T has managed to integrate the two businesses. In fact, there are now some 250 ongoing projects involving NCR and AT&T units, focusing on such crucial areas as messaging, network computing, wireless communications and desktop video. The merged companies, for instance, are developing a cash machine that identifies customers by voice rather than by a numerical code punched on a keypad. NCR has been given the key to the famed Bell Laboratories research center. Says Stead: "It's like a kid being let loose...
...computer mess dumped on us then, and we don't want it now," says Charles Exley, NCR's chief executive. In discussions last week with AT&T's chief executive, Robert Allen, Exley warned of the history of failed computer marriages, such as Sperry and Burroughs or IBM and Rolm: "The industry graveyard is littered with mergers that have been outright calamities, and there is no reason to believe this one will be any different...
...designed to provide data and telephone communications mainly for large corporations. The operation, however, has not been successful, losing $1.3 billion in the past eleven years. IBM eventually bought out Aetna and Comsat. Despite that setback, IBM has continued to push ahead into telecommunications. Last year it bought Rolm, the third-largest maker of telephone switching equipment, for $1.2 billion. IBM and Merrill Lynch have created International MarketNet, a service that supplies information to the financial community. And IBM has joined Sears and CBS in a venture called Trintex, a two-way videotex service for home computers...
...industry is already waiting for IBM's next acquisition. Predicts Morgan Stanley's Weil: "Now that the precedent has been set and the taboo broken, IBM won't stop at Rolm." One possible target is Intel, a leading manufacturer of semiconductor chips, the key components of computers. IBM already owns 20% of Intel and may decide to go for more. -By Charles P. Alexander. Reported by Thomas McCarroll/New York and Michael Moritz/San Francisco