Westinghouse Back On Track

April 27, 1995|By Kim Clark | Kim Clark,Sun Staff Writer

You couldn't tell by looking at the bottom line last year, or even for the first three months of 1995, but Westinghouse Electric Co. is finally heading back into steady growth and profitability, Chairman Michael Jordan told investors at the company's annual meeting in Linthicum yesterday.

The Pittsburgh-based company has sold unnecessary divisions to help pay down $2 billion of debt,reduced its work force by more than 3,400 employees in the last two years and developed new energy business opportunities in China, he said.

"All in all, we are financially stronger than we were a year ago . . . Our sales and profits as a whole are on a positive trend," he said.

The company plans to keep cutting its costs and to sell other assets -- such as its share in the Pittsburgh Pirates baseball team and its real estate development unit -- to pay off another $1 billion in debt by the end of this year.

In addition, he said, Westinghouse wants to profit by commercializing some of its defense research. This August, for example, the Linthicum-based Electronic Systems unit will start offering to the public a new mobile telephone system that promises "seamless coverage" anywhere in North America or within 200 miles of the continent.

None of that assuaged many of the approximately 300 shareholders gathered inside a hangar at Westinghouse's electronics operations here, though.

For more than an hour, angry workers, retirees and investors criticized the salaries and bonuses awarded to executives and directors, saying they were inappropriate when the company was laying off workers, reporting small net profits and paying no dividends.

James Hagan, a 20-year employee of WJZ-TV in Baltimore, which is owned by Westinghouse, asked why Mr. Jordan received a $1 million salary and a $357,000 bonus last year when "I haven't had a raise in five years?"

"We . . . the little people, the employees, the backbone of the company, have suffered for a long time. But the top executives got a cash bonus of more than 1 percent of the net profit for (1994). I don't understand how you can justify that," he said.

Rollin R. Brandenburg, an investor from Winthrop Harbor, Ill., proposed that executive salaries be capped at $1.5 million a year. "Each time the stock does well you reward yourselves with lavish bonuses. But when something goes wrong, no one is responsible," he complained.

He won a round of applause when he added "And get rid of that box at Three Rivers Stadium. You ought to buy your own tickets" to Pirates baseball games.

Mr. Jordan conceded that many investors, "especially smaller investors with a longer history, and a large number of employees, have seen their net worth take a very significant hit" because of a long-term decline in Westinghouse's stock price.

But he noted that the stock has rebounded recently, and has risen about $4 in the last year.

Westinghouse's stock closed unchanged yesterday at $14.875.

And the critics may be forgetting that even the first quarter's minimal profit -- Westinghouse Tuesday reported a net profit of $15 million or 1 cent a share for the first quarter of 1995 -- showed new strength.

"A couple of years ago, we came damn close to going bankrupt, which would have driven the stock down to nothing," Mr. Jordan said.

Analysts said yesterday that the investors' anger is understandable, but they believe that Westinghouse is on the way to recovery.

"Sometimes it is hard for folks to see this, since there are no earnings," said Nicholas Heymann, who follows the company for NatWest Securities Corp. in New York. "But you shouldn't judge the whole year" by this first quarter, he said.

One reason net profits have been low: The company has written off many charges associated with layoffs and early retirements that will end up reducing its costs over the long term, he said.

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