Comeback for Ampex

In the bull market of the late 1950s, one of the rampaging stocks was Ampex Corp., a Redwood City, Calif., company that manufactures recording equipment ranging from videotape for television stations to magnetic memory tape for high speed computers. From 75-c- a share in 1954, Ampex stock shot up to 45 3/8 in 1959 after two stock splits. Then, in 1960, Ampex suddenly lost its magic. Its one-time profits turned to a $3,930,000 loss, and its stock plummeted.

Today, Ampex is well on the road to recovery. This year the company expects to earn $3,500,000 on sales of $92 million, and its stock has risen from a 1962 low of $10 to $16.75 last week. But to accomplish its comeback Ampex has gone through a painful purge.

Without a Plan. Ampex got into trouble by growing almost without effort--and without planning. In 1955 Ampex Founder Alexander M. Poniatoff,* a brilliant engineer with scant taste for administration, stepped up to chairman and turned over operational control of the company to ex-Banker George I. Long Jr., 55. Faced with a constant proliferation of products, Long tried to meet the situation by decentralizing Ampex into five divisions, each so loosely controlled that it amounted almost to an independent company. This added millions to overhead--millions Ampex could no longer afford when the 1960-61 recession began to cut into sales.

To solve its problems, Ampex called in a management consultant firm which in turn called in personable William E. Roberts, 38, a crack administrator who had just lost out in an executive suite battle for the presidency of Chicago's Bell & Howell Co. Roberts, who passed up 15 other job offers to take on the presidency of Ampex, proceeded to cut administrative costs by $4,600,000 in a single year. He recentralized financial control in Redwood City, hired one ad agency to replace five, and consolidated Ampex's diffused marketing operations ("We had as many as four offices in a single city"). More remarkable, he eased out all but one of Long's half-dozen top subordinates without engendering any visible bitterness.

Time for Normality. Roberts freely admits that he owes a big debt to Long, who stoutly refused, even after Ampex came upon hard times, to make any major cuts in the company's research budget. Says Roberts: "The previous management could have made itself look reasonably good by eliminating several million dollars worth of research and development, but it would have set us back five years." Thanks to Long's stand, Ampex is still churning out new products, two weeks ago introduced a portable videotape recorder that sells for $12,000 v. $35,000 to $60,000 for most other videotape recorders.

To accomplish Ampex's turnaround, Bill Roberts has had to neglect his low-90s golf game and better-than-average tennis, and sacrifice virtually all semblance of family life. But now, says he, "it's nearing the point where I'm beginning to be satisfied and lead a normal life. Today, we're running this company with predetermined objectives, not just taking a product and carrying it one little step further."

* Who combined his initials with "ex" (for "excellence") to form the company's name.

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