CEO aims to achieve turnaround

Troy L. Smith//May 18, 2012//

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Since CEO Albert Angrisani rejoined Harris Interactive Inc. last June, the struggling market research firm has cut costs, shrunk its loss and increased its stock value.

It is a bit of deja vu for Angrisani, who led the last major turnaround at Harris Interactive as its president and chief operating officer from 2001 to 2004. During that time, the company’s consolidated revenue increased by more than 270 percent, while shareholder value jumped more than $200 million.

In the years after Angrisani’s departure, however, Harris Interactive’s revenues plummeted, its losses mounted and the value of the company’s stock fell from over $7 a share to under $1 as of June 2011.

Angrisani faces the challenge of returning Harris Interactive, a company that has gone through three CEOs since he left, to prominence. One step includes a plan to return the firm’s corporate headquarters to the Rochester area.

Harris Interactive relocated its corporate headquarters from Brighton to New York City in late 2008. Michael Burns, vice president of investor relations and external reporting, said the company now has 125 to 150 employees at its offices in Brighton. By the end of the year, those offices will house 200 of Harris Interactive’s 300 U.S. employees.

Angrisani said shifting more staff here is part of the company’s cost-reduction strategy. The move should be relatively easy compared with Harris Interactive’s financial turnaround, he said.

"The market research industry has changed dramatically," Angrisani said in his first interview with the media regarding Harris Interactive’s financial outlook since rejoining the company. "In 2004, you could count on the industry growing regularly 5 to 8 percent. Not anymore."

As with each of his turnarounds before, Angrisani’s plan for Harris Interactive revolves around a pyramid structure he has developed. The first step calls for rightsizing the company.

Within a month of Angrisani becoming interim CEO, Harris Interactive announced plans to consolidate some facilities and cut costs. The company said it would pursue sublease agreements for excess space in Norwalk, Conn., Portland, Ore., and Brentford, U.K. Harris Interactive also announced plans to close its operations in Asia and reduce staff in the United Kingdom.

While Angrisani said the firm will continue to focus on its expense structure, he said he felt comfortable with the progress made toward rightsizing the business and boosting the productivity of its research and operations delivery systems.

Angrisani said Harris Interactive has entered the second phase of his pyramid model, focused on establishing a new sales and marketing program.

While the company has managed to narrow its losses, revenues have remained on the decline. For its fiscal second quarter, Harris Interactive reported revenues of $39.1 million, down from $44.9 million the previous year. For the third quarter, the company logged revenues of $34.1 million, down from $37 million a year earlier.

To address its revenue woes, Angrisani said, Harris Interactive will focus on innovation, product development and upgrading its current products, including its well-known line of Harris Poll syndicated products.

"Sales are No. 1," he said. "If we don’t fix this sales engine and grow this company organically, it won’t last."

Turnaround guy
Bob Lederer, founder and president of RFL Communications Inc., an Illinois-based publisher of market-research industry newsletters, said if anyone can turn things around at Harris Interactive, it is Angrisani.

When the company named Angrisani its interim CEO last June, its stock shot up nearly 14 percent. The interim tag was removed in March.

"All you have to do is look at his past history," Lederer said. "Al has the expertise in research in general, and he certainly knows that company. If there’s any reason for optimism, it’s because of him. "

Early in his career, Angrisani was a vice president at Chase Manhattan Bank in New York City. After that, he served as President Ronald Reagan’s assistant secretary of labor and chief of staff from 1980 to 1984.

Later, Angrisani was president and CEO of Total Research Corp. from 1998 to 2001. Total Research merged with Harris Interactive in November 2001.

Angrisani became Harris Interactive’s president and chief operating officer. With founder and CEO Gordon Black, Angrisani led the company in its peak years.

"The key to the success in a company like Harris was always the people," recalled Black, who founded Harris Interactive, originally called Gordon S. Black Corp., in 1975. "You are dependent on the experience and the skill set of the people in the company so you can grow. I remember Al as a good partner, and at the time we left Harris, it was massively successful and growing."

Harris Interactive’s second-quarter revenues topped $36 million in January 2004. That month, Robert Knapp was appointed vice chairman and CEO, taking over for Black as part of what company officials said was a succession plan. Prior to joining Harris, Knapp was executive vice president and chief strategy officer at Gartner Inc., a $900 million research and consulting firm in Connecticut.

That June, Angrisani left Harris Interactive to pursue other endeavors. He would go on to lead the turnaround at Greenfield Online Inc., which eventually was purchased by Microsoft Corp.

Meanwhile, Harris Interactive began to struggle. Black left the company in early 2005. That May, after two consecutive quarters of decreased earnings, Knapp resigned. The company’s stock had fallen below $4 a share.

Gregory Novak, who became president and chief operating officer after Angrisani, replaced Knapp. Novak lasted until 2008, leaving as the company continued to decline.

Next was Kimberly Till, who left her post as CEO of New York City market research firm TNS North America to become CEO of Harris Interactive in late 2008. Under Till, Harris Interactive went through layoffs, including 100 U.S. employees. When Till joined Harris Interactive, its stock was at $1.15 a share. When she left in June 2011, it was barely above 70 cents.

"A lot of very bad decisions were being made, which is why I resigned in 2005," said Black, who has sold all of his shares in the company. "I could see where the company was going. A lot of talented people saw it too in 2005 and early 2006, and they left too."

Leadership needed
In Angrisani’s opinion, Harris Interactive’s difficulties were due to bad acquisitions and lack of strong leadership.

"Generally speaking, the company embarked on an acquisition strategy that did not work," he said. "And the people that were running the business at a CEO level just didn’t have the requisite experience to manage that."

The company started to show signs of turning around in February. It reported a jump in second-quarter profit, posting net income of $1.6 million, up from $300,000 a year earlier.

For the third quarter, Harris Interactive reported a net loss of $323,000, down from $2.3 million a year ago. The company’s stock was trading above $1.20 a share this month.

Lederer said Angrisani’s biggest challenge will be jumping back into a market research industry that has changed a lot since 2004.

"There are probably 10 to 20 times as many companies now than there were then," Lederer said. "Back in the day, Harris was one of the top three companies in the industry. It’s very difficult now for any company to be that dominant. The business has become more and more a commodity business. You have to really control your costs and focus on where you can be really successful."

Black said he wishes Angrisani luck. However, he remains one of Harris Interactive’s biggest doubters. He no longer thinks the company has any competitive advantages that would allow its revenues to grow.

"They’ve made such massive cuts over the years to stop the hemorrhaging," Black said. "But it won’t be a true turnaround until they see revenue growth, and there hasn’t been any of that thus far.

"I don’t expect that there will be any significant growth in the company," he added. "I think it will limp along as a slightly unprofitable or a very marginally profitable company, which is very unlikely to change in the foreseeable future."

Despite naysayers, Angrisani plans to stay the course. Greenfield Online, his last turnaround project, led to Microsoft’s $497 million purchase of the company. Yet, Angrisani said, it is too soon to make predictions for Harris Interactive.

"You sort of write the plot as you go along," he said. "I have no idea what the ultimate outcome is. No one does. Critics can think whatever they want. I stick with the script because there are too many variables. We’re going to stay with what I’ve always done and be as successful as we can in growing this company."