Computer Industry Icon Jerry York Passes Away
York, who had suffered a brain aneuryism, was one of former IBM Chairman and CEO Lou Gerstner's first hires in May 1993 when Gerstner set about the difficult task of trying to return IBM to its glory days. This at a time when some were calling for the breakup of IBM.
York, highly regarded as a corporate turnaround artist, was also a member of Apple's board of directors for more than 12 years, taking the job when Apple's future was also in doubt.
York brought a refreshing critical eye to businesses in trouble. At IBM, his hard-nosed leadership was credited with reining in IBM's bloated and arcane organizational structure.
York's ability to cut through the IBM culture of outdated foil presentations that had little to do with profits and losses became something of legend within IBM. He was known to dress down old school IBMers who were more interested in protocol than results.
York spent only two years and four months at IBM. But many Wall Street insiders felt the IBM turnaround had as much to do with his financial prowess as Gerstner's steady strategic hand. Indeed at the time he left IBM in September 1995 there was some talk of tension between the two executives because of York's superstar Wall Street status. When IBM announced that York was leaving, the company's stock dropped 2 percent on a day when other computer stocks were up.
When York took the IBM job there were serious doubts about the survival of the company. York set about the business of bringing the company back to earth by assuring that IBM's separate businesses brought expenses in line with sales. During his tenure, York reduced IBM's annual expenses by $6.5 billion and left IBM with more than $10 billion in cash.
"Jerry York played a very important role during the early days of the IBM transformation," Gerstner said in a statement. "He was an extraordinary analytical executive. He demanded deep, insightful analysis of business issues before decisions were made. As such, he was a great ally in helping a CEO assess the underlying causes of a company's strategic challenges."
In his book, "Who Says Elephants Can't Dance?," Gerstner credits York with very quickly cutting $2.8 billion from IBM's cost structure. (That's $2.8 billion in mid-1990s dollars.) The cuts were painful, and included layoffs, but it gave IBM enough breathing room to keep fighting and changing the business. While there were a lot of job reductions, York's actions eventually helped save or create many times more jobs than were cut.
In an interview with CRN in 2002 at the Raymond James Conference, York said the book "someone needs to write about Lou Gerstner and the team he put together is 'The Turnaround That Really Lasted.' Unlike Kodak. Unlike Xerox. Some of these other large old-line American companies that looked like they had turned around but didn't really."
York said that ultimately the key to the IBM turnaround was Gerstner's "unending and uncompromised focus on the customer." What's more, he proved prescient at the time, when he said he was "highly confident" new IBM CEO Sam Palmisano "will carry on where Lou left off." Before taking the IBM job York was chief financial officer of Chrysler, where he was credited with overseeing the production of the company's K Cars and was promoted to chief financial officer in 1990. At the time he left Chrysler York was being touted as a replacement for legendary Chrysler CEO Lee Iacocca.
After leaving IBM, York joined renegade billionaire investor Kirk Kerkorian's Tracinda Corp. as vice chairman. At Tracinda, York helped drive takeover attempts of his former employer Chrysler and General Motors.
York also played a role in the channel as the chairman, president and CEO of former computer products direct marketer Micro Warehouse. York and a group of investors that included Hollywood super agent Michael Ovitz took the reseller private with investors in a buyout in 2000.
But the leveraged buyout left the reseller with $200 million in debt. Micro Warehouse filed for Chapter 11 bankruptcy in September 2003 and its assets were purchased by CDW Corp. in September 2003 for $22 million.
Apple's Web site on Friday featured a front page tribute to York with a note: "With deep sadness we announce the loss of a member of our corporate family and dear friend, Jerry York. Jerry courageously joined Apple's board in 1997 when many doubted the company's future, and contributed his extraordinary character, business expertise, and leadership to help guide Apple for over a decade. Jerry was one of a kind - and we're going to miss him dearly."
In a prepared statement, Apple CEO Steve Jobs said: "It's been a privilege to know and work with Jerry, and I'm going to miss him a lot."
Jeff Matthews, hedge fund manager and the author of Pilgramage To Warren Buffett's Omaha , said Jobs' tribute to York is a sign of his contributions to the Apple turnaround. "That says as much about York as anything else he did," said Matthews. "Who knows what went on behind the scenes on the Apple board? The fact that Jobs said what he did means a lot."
"You don't stay on the board of Apple for 12 years without being a pretty impressive character yourself," said Matthews. "You have got to bring something to that table."
Matthews said York was the kind of executive that "said what he meant and he meant what he said. That is pretty rare in business."
"It doesn't come along too often," said Matthews. "Most of these guys are angling for the top job and everything they say is geared to get them up the ladder. York just seemed to want to get things done."
Ed Moltzen contributed to this article.