Gordon steps down at Analogic

This time, he means it
By Steven Syre
Source:  Globe
Tuesday,January 29, 2008
Edition: 3, Section: C, Page 1

Boston Capital

Bernie Gordon's leaving, and he means it this time.

Gordon, the founder of Analogic Corp., presided over what was presumably his last annual shareholders meeting as chairman yesterday, though he remains a director. The Peabody company's board met after the public event and named director Edward Voboril its new chairman. Jim Green took over for Gordon as Analogic's chief executive last May.

Gordon, 80, talks a lot about the future for someone on the way out. He knows there has been no shortage of local companies run by strong-willed technical people, engineers and scientists, during his years leading Analogic. But what happens when those leaders leave?

Often, the answer isn't pretty. "Many of those companies up and down Route 128 founded by technical characters failed to survive their departure," Gordon pointed out at yesterday's meeting.

Gordon certainly was and remains a technical character, with a reputation for tough talk. He came from the same era and academic background as Ray Stata of Analog Devices and Alex d'Arbeloff of Teradyne Inc. He was awarded more than 100 patents, many for important devices or technologies, and over 40 years built a business culture around Analogic's engineers.
Big shareholders sometimes complained that he was running a public company as if it was a private business. Analogic keeps a big research and development budget and sits on lots of cash. Critics say it's too reluctant to cut ties with struggling ventures.

Some investors have beefs today. Herbert Denton of Providence Capital in New York doesn't like the idea that Analogic directors own very little stock and that the company did nothing with a list of experienced people he suggested as potential new board members. "It's important to have fresh ideas coming into the board," Denton says. "I don't want it to be another Route 128 casualty."

Analogic has never grown into a giant company, and annual sales from its high-tech medical equipment and other products don't reach $400 million. But public shareholders have done all right, earning an average of just over 11 percent annual return over the past 20 years.

As it happens, Gordon is stepping down from the top jobs at Analogic for a second time. He retired once before, but the company performed poorly and he returned in the fall of 2006. The company was under pressure to cut costs, but Gordon made his position clear to investors at Analogic's annual meeting just a year ago.

"I find it unacceptable that a number of stockholders only give a damn about the short-term results they're going to get," Gordon said in response to a question. "Employees are important, customers are important, and you are important. But nobody's going to lay off a pile of people in order to make you a little richer. It ain't going to happen, not as long as I am here."

A few months later, Analogic hired a new chief executive. Soon, the board agreed to buy back stock worth $60 million. Analogic's new chief executive outlined plans to control spending and make better use of company cash yesterday. The company is expected to declassify its board, putting all directors up for election at the same time, in response to past shareholder pressure. Gordon can live with all that. He points out that the company didn't lay off any of its nearly 1,600 employees.

Gordon thinks a good successor realizes the company's critical assets are in Analogic's engineering workforce.

"People who are less technical, are much more process oriented, begin to treat the geese that laid the golden eggs as employees who are lucky they've got their jobs," Gordon says. "The most creative people are very difficult to relate to; they need an arm around them."

That goes for writers, too.