Simon to counsel troubled IRE Ex-Treasury secretary to head panel advising encryption company

February 06, 1997|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Integrated Resource Engineering Inc. of White Marsh said that former Treasury secretary and leveraged-buyout pioneer William E. Simon has agreed to become chair of a panel of outside advisers the computer-encryption company hopes can help it bounce back from recent setbacks.

The tie with IRE is Simon's first venture into high technology. He gained early fame as a bond trader before serving at the Treasury Department under Presidents Richard M. Nixon and Gerald R. Ford, and reached his highest private-sector profile in the 1980s with leveraged buyouts including Avis car rental and Gibson Greetings.

In recent years, Simon has invested in real estate and financial service companies in the western United States and the Pacific Rim before founding a merchant bank with offices on both coasts and in Hong Kong.

"None of his activities have been in the technology field, and that's what he's interested in doing," said Anthony Caputo, IRE's chief executive. "He thinks the money that has been earned in technology to date is a small percentage of what people are going to make."

Caputo said the company was introduced to Simon by Montgomery Securities, IRE's San Francisco-based investment bankers, and is counting on him to attract outside advisers, woo major new customers, and strengthen its nontechnological skills.

"The ability to pick up the phone and call Bill Gates [Microsoft's chairman] or the chairman of IBM, Lou Gerstner, is a very important ability," Caputo said. "So many things are business strategy, financing strategy, marketing strategy."

Big corporate partnerships have given IRE trouble recently. In November, the company announced a restructuring of its arrangement with MCI Communications Corp., said William Loomis, an analyst with Ferris, Baker Watts Inc.

"They restructured [MCI's] obligation into a marketing alliance, rather than an obligation to take a certain amount of products," Loomis said. He said MCI once accounted for about half of IRE's sales, "and now it's essentially nothing."

The MCI news helped push IRE's stock down from $18.75 in October, right before IRE disclosed a potential problem with the MCI deal, to $8.50 Tuesday.

Yesterday, IRE shares rose to $9.625.

"The stock was affected by that, but frankly I view it as a temporary event," Caputo said.

Loomis, the Ferris, Baker Watts analyst, said that IRE has some short-term problems -- he expects the company to report a fourth-quarter loss of about 27 cents a share. But both he and Caputo said the encryption company was likely to find a place in the burgeoning computer-security business.

Pub Date: 2/06/97

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