Sleepy Micron is getting a jolt of caffeine

NAMPA, Idaho -- Joel Kocher must have smiled when he noticed workers shaving the tops off the newly installed speed bumps at Micron Electronics Inc. headquarters recently -- in response to complaints from jostled employees.

NAMPA, Idaho -- Joel Kocher must have smiled when he noticed workers shaving the tops off the newly installed speed bumps at Micron Electronics Inc. headquarters recently -- in response to complaints from jostled employees.

Not that Kocher (pronounced KO-her) condones hot-rodding around the parking lot. But if there's one thing Micron's new president and chief operating officer has tried to instill in the company, it's this: In the rough-and-tumble PC business, speed wins. If you're slow, you sink.

Consider this. Over a two-week period ending at this week's Spring Comdex show, Micron (MUEI) will have replaced 60 percent of its product line. By July, the remaining products will be refreshed.

'You'll see us get more in your face, relevant, crisp, exciting and customer driven.'
-- Micron CEO Joel Kocher.

But Kocher will be stomping on the pedal even more. In June, he proposes to "relaunch Micron," a management and marketing initiative to dramatically raise the visibility of a $2 billion company that has long lived in the shadows of its bigger direct-sales rivals Dell Computer Corp. (DELL) and Gateway 2000 Inc. (GTW).

"Our marketing effort has been anemic," rails Kocher. "We're putting in place the talent and compelling set of messages that will make Micron a player, not a well-kept secret among a few isolated buyers."
Part of the problem may have been geographic, the other part genetic. Located 18 miles from Boise, Micron's headquarters, a one-story metal-sided building, seems literally in the middle of nowhere -- just around the corner from a John Deere showroom. Genetics may have played a role, too, because until recently, more of the company's leaders had started out as engineers than as marketers.

Whatever the reason, Micron has certainly kept its light under a basket. While sales and earnings of direct-sales rival Dell have skyrocketed, Micron's performance over the last four quarters has remained flat. What's more, the company's operating expenses and inventory piled high.

Can the master motivator get Micron Electronics humming again? Kocher's strategy.

In the 1997 calendar year, Micron earned $63.6 million on sales of $2 billion. Not bad, but that performance makes it a distant No. 3 in the direct-sales field behind Dell's $7.7 billion in revenue and Gateway's $6.2 billion.

If Micron has fallen asleep at the wheel, Kocher, 41, is the caffeine antidote. His pep talks, often given in battle fatigues, are legendary. At previous employer Power Computing Corp., Kocher instituted a "cultural revolution" that included "fight back for the customer" day each Friday, when employees were encouraged to wear battle gear.

Kocher's Kung Fu-like tenacity has generally worked. During his seven-year tenure at Dell, where he was president of worldwide marketing, sales and service, revenue grew from $100 million to $3.6 billion. And his two-year stint as president and chief operating officer of Macintosh clone maker Power was so successful that Apple Computer Inc. (AAPL) bought the company's assets for $100 million to effectively rid itself of the competition.

"He doesn't look that dynamic, but when Joel talks, he can raise the hair on your arms," says Tom Saunders, a former Dell sales staffer.

After arriving at Micron's spare corporate headquarters in January, Kocher acted quickly. He and CEO Joseph Daltoso announced that 10 percent of the company's 4,500-strong work force would be reassigned to parent Micron Technologies (MU). Four new vice presidents were recruited in a matter of weeks. Advertising and public relations agencies were replaced. And Micron sold off 90 percent of its wholly-owned contract manufacturing services for $256 million.

Building a new Micron
Now Kocher's attention turns to building a new Micron. In order to grow, the company must find new markets for its desktops, notebooks and servers, as well as better penetrate its current strongholds in small- and medium-sized businesses. "We are not in the consideration-to-purchase set," says Kocher, meaning that Micron is often not considered by large corporate buyers. "They need to grow out-of-market, out to those (market segments) that don't know them," said John Dunkle, president of market researcher Workgroup Strategic Services Inc.

To do that, Micron must upgrade its image with consumers. "This is our brand recognition now,'' says Mark Gonzales, vice president of worldwide marketing, holding up the blank side of a business card. "There isn't any. The good part is that there aren't any negatives we have to dig out of."

Expect a new ad campaign this summer that will emphasize, among other things, technological excellence. A former Apple executive, Gonzales promises also the Micron brand will be tied to some emotional attribute, just as Apple's Macintosh was in the 1980s.

He hopes the brand campaign will within a couple of years grow Micron's notebook computer shipments, which now account for about 15 percent of sales, up to about 30 percent.

"You'll see us get more in your face, relevant, crisp, exciting and customer driven," Kocher says.

Kocher must also fine-tune Micron's direct sales model, get it more in line with what he experienced at Dell. The company has written off $70 million in inventory over the last two quarters, and is now working with supply vendors to have parts delivered on a just-in-time basis.

Getting aggressive on price
Another change: Instead of following the lead of competitors in pricing, Micron will strive to lead on aggressive price cutting.

That was evident even before the sun came up in Idaho last Wednesday. At 5:30 a.m., a team of Micron competitive analysts jumped on the Net to check out their competitors' just released price lists for the new Intel 350MHz and 400MHz systems. Three hours later, the company's top executives were using that information to refine their own hours-old prices.

Indications are that the revival plan is working. In March, a study by Workgroup Strategic Services found that Micron had edged ahead of IBM Corp. in terms of how businesses perceive the "brand equity" of top PC players. Micron placed fourth, behind Dell, Compaq Computer Corp. (CPQ) and Hewlett-Packard Co. (HWP).

And the influential Motley Fool investor service threw a spotlight on Micron recently, concluding, "Micron Electronics really has the only shot among larger business PC vendors of replicating the Dell direct sales model."

Mike McGuire, analyst for mobile products at Dataquest, says Micron's products are solid. "Now it's more of an issue of marketing and positioning the company."

That is true -- If Kocher can position Micron and keep his employees clear of speed bumps.


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