Time ran out last week on Ideon Group Inc. chairman Paul G. Kahn. His last-ditch attempt to turn around the struggling company went for naught.
Ideon replaced Mr. Kahn with Eugene Miller, 70, an outside director recently charged with overseeing Ideon's newly formed "strategic direction" committee.
Mr. Kahn's forced exit came two weeks after Ideon selected Lazard, Freres & Co. and Skadden, Arps, Slate, Meagher & Flom as financial and legal advisers - suggesting to some the impending sale of the company.
In an interview, Mr. Kahn tried to put a positive spin on his exit. "This freed me up to pursue some immediate opportunities," he said, which he would not name. Nor would he comment on the circumstances that preceded his departure last Tuesday.
Mr. Kahn acknowledged enduring "clearly a difficult couple of years" marred with "a lot of acrimony, harassment, and litigation."
He summed up his Ideon career as "batting .500, with two very successful acquisitions, which increased in value, and product losses that were abysmal failures."
Mr. Kahn was referring to the additions of Wright Express, which sells enhanced payment and information services to commercial vehicle fleets; and National Leisure Group, a provider of vacation and travel packages.
Mr. Miller was not available for an comment.
Reaction in the credit card industry to Mr. Kahn's departure and the future of Ideon was mixed.
"I don't know if this (Mr. Kahn's firing) is a prelude to the company selling itself," said David Katz, chief investment officer of Mattrix Asset Advisors in New York and an Ideon shareholder since May.
"Perhaps he was a roadblock for selling, or possibly the company wants a better valuation for the annual shareholder meeting."
Leslie Nelkin, an analyst with Furman Selz, said he had heard nothing that would conclusively point toward Ideon's sale. He allowed that he "could understand how a company in a related business could purchase Ideon and acquire several interesting product lines and probably even reduce the cost base further."
Mr. Kahn, who was responsible for the phenomenal growth of the AT&T Universal card in the early 1990s, was hired by SafeCard in December 1993 with a mandate to broaden the company. In fact, he did reorganize the company under the new name, but some say he went too far too fast in expanding into new businesses. He was forced to retreat from his expansion strategy last fall.
About 30% of Ideon employees lost their jobs as ambitious ventures such as the Family Protection Network, a registry for missing children, and a servicing agreement with the PGA Tour Partners MasterCard, fell by the wayside.
"The company set about on a diversification strategy," said Mr. Nelkin. "Unfortunately, the avenues it pursued turned out poorly. There is little doubt in many minds that the expense base got too large."
For 1995, Ideon showed a net loss of $49.4 million after special charges, compared with net income of $20 million in 1994. While the company recovered enough to turn a fourth-quarter profit, Ideon stock, valued over $20 per share in February 1995, had dropped under $10 at year's end.
"While it may be that the original designs of Kahn to build a more expansive company were not realized, the current ingredients are there to make it a successful smaller venture," said Mr. Nelkin.
One source, under condition of anonymity, implied that Mr. Kahn's aggressive salesmanship - a style he honed during his years with AT&T - may have worked against him this time around.
"Paul really was out there promoting himself at AT&T, so when something went wrong, everybody was champing at the bit to attack him," the source said.
"Whenever anybody is the CEO, if they launch products that don't work, you have to be held accountable. But to a certain degree, Paul had pulled things together, so that had they given him time, he could have pulled it off. But events just pulled away and he couldn't resurrect it."
Mr. Kahn remains on Ideon's board of directors - at least for now. "Kahn should not be on the board," said Mr. Katz. "That's ridiculous, and it shouldn't be allowed."
"He seemed to look at himself as a visionary rather than a cost-cutter and business manager, which is what Ideon needed," concluded Mr. Katz. "The fit didn't seem right."
