- The Washington Times - Monday, February 19, 2001

Michael Saylor has embraced his rocky past.
Mr. Saylor, 36, says he has emerged from a tumultuous 2000 as a wiser, humbler person and a better manager.
The co-founder and chairman of MicroStrategy Inc., a software company in Vienna, watched his good fortune in 1999 turn to misfortune last year when accounting problems deflated his company's stock from a high of $333 a share last March 10 to its Dec. 29 close of $9.50. MicroStrategy shares closed on Friday at $10.25.
He also had to layoff 234 persons, about one-tenth of the work force.
He paid a heavy fine to the Securities and Exchange Commission.
The luster he worked so hard to put on his company's image and on his own image through television appearances and a string of interviews and speaking engagements, was tarnished. The visible Mr. Saylor took a visible fall and hasn't fully returned to the spotlight.
"Everything worked for us for a year. Then we saw everything work against us for a year. When things spin one way, they are going to spin the other way. I think managing under both circumstances, it seasons the management team. It makes you more cautious, more careful. I think you're more humble. In the end, I think you become more balanced and probably a bit more calm, not so frenzied," says Mr. Saylor, who sits in a black, puffy leather chair in his 14th floor office.
Following MicroStrategy's dramatic downfall last year, Mr. Saylor made palpable changes at the company, which makes software that companies use to analyze sales.
He ceded control, bringing in Eric Brown to serve as Micro-Strategy's president, a role Mr. Saylor once held. He also brought in WorldCom Vice Chairman John Sidgmore to oversee Strategy.com, the company delivering news and information electronically that Maryland-based Aether Systems invested $25 million in.
Layoffs cut the work force to about 1,900 people, and Mr. Saylor threatened earlier this month in a conference call with investors to make further cuts and get rid of unprofitable operations to save money.

Some things don't change

Mr. Saylor still is reflective and lucid and as likely as ever to talk about Persian history. He still takes the big-picture view of things his on-line university is still in the works, and he will sell about 3 million of his 43.7 million shares of stock in MicroStrategy to fund the cyber college. Even after the stock sale, he will control more than 50 percent of company.
He still is a child of technology. His BlackBerry, a handheld computer, rests on the arm of his chair but connects him to the digital world when he's away from his personal computer; his PC sings out constantly to notify him that yet another e-mail has arrived; and his phone rings so many times that he courteously gets up to disarm what seemingly is the least technical piece of equipment in his spacious, L-shaped office.
But Mr. Saylor's profile has changed. Now he is just another chairman on the crowded landscape of tech entrepreneurs, happy to work quietly in the background to rebuild his company. He is not as visible as he once was.
That retreat was a scripted move, and it's a big change from the time when he was MicroStrategy's best marketing tool an outspoken leader who drew as much attention to the software company he helped start in 1989 as he did to himself.
Dan Vesset, senior analyst at Cambridge, Mass.-based market research firm IDC Inc., says the move to rein in Mr. Saylor was a shrewd one.
"I think it's good from an image perspective. It shows that it is not a one-man show," Mr. Vesset says.
While he relished the spotlight, Mr. Saylor says it became absurd.
"I could have dropped a brick on the floor and it would have been regarded as brilliant," he says.
All that changed last March when the SEC instructed the company to restate earnings. The SEC said that from the time it first sold stock to the public in June 1998 until March 2000, Micro-Strategy overstated its revenue and earnings. Mr. Saylor agreed to repay $8.28 million, co-founder Sanju Bansal agreed to pay $1.63 million and former Chief Financial Officer Mark Lynch paid $138,000.
In addition, they each agreed to pay a civil fine of $350,000.

Looking up

But then the company's fortunes began to improve.
MicroStrategy closed a difficult year with stronger than expected fourth quarter earnings, which it happily reported on Feb. 6. Fourth-quarter revenue reached $58 million and fiscal year revenue reached $224 million, a 48 percent increase over 1999 revenue of $151 million.
The earnings report was vindication.
It sent the signal that Micro-Strategy is not dead and buried, despite the SEC trouble and layoffs.
"We need to go out and remind the world we're still here, and we had a difficult year in 2000, but that's behind us and we've solved all those issues," he says.
Not all the stock remains flat, indicating there is more work to do before investors are convinced MicroStrategy's problems are in fact over.
A hopeful sign, MicroStrategy signed up more customers in the fourth quarter 83 than it did in any other quarter. That's because the company has overhauled its marketing efforts and now sells its data-mining software to smaller corporate customers. It had focused almost solely on large businesses.
While 2000 was focused on fast growth and on trying to stand out, Mr. Saylor has billed 2001 as a year to get "back to basics."
It has changed his own role, from visionary to a nuts-and-bolts practitioner.
"I would say a year ago my focus was entrepreneurial and creative. I was creating lots of new businesses. In an environment where you have plenty of money, plenty of people, plenty of bandwidth and attention, the question is 'what are you going to invent next?' I would say my focus this year is to focus on the core business and make it run efficiently," he said.
That includes slowing the company's growth, getting profitable, adding investors and cutting costs. MicroStrategy trimmed $9 million from the cost of operations in the fourth quarter, compared with the third quarter, in part through layoffs.
So far those changes haven't helped the company turn around the performance of its struggling stock, which fell more than $3 a share in trading the day after Mr. Saylor made the surprising announcement that he would divest himself of 3 million shares of his stock in the company to fund the on-line university.
"Our primary risk is not that we don't grow fast enough. At this point, our primary risk is that we don't prove to the world that we have a viable, profitable business," he says.
MicroStrategy has a viable technology and it is virtually without competition.
"Our technology is too good for us to fail as a company, but we don't have the billion dollars of capital necessary to become a household name, so it makes sense for us to retrench … and focus on being a really good infrastructure vendor to other businesses. I think that will result in us being a lean, mean, much more focused company," Mr. Saylor says.
If he can do that, Mr. Saylor is much more likely to repeat the glory days of 1999 than he is to live through the angst-filled days that dominated last year.


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