Sunbeam and "Chainsaw Al"
The Turnaround of Sunbeam
In October 1997, just 15 months after accepting the position as chairman and CEO, Dunlap issued a press release stating the turnaround was complete. He also announced that Morgan Stanley of Stanley Dean Witter & Co., had been hired to find a buyer for Sunbeam. Philips, a Dutch electronics giant, apparently was interested in purchasing Sunbeam for the $50+ per share the stock was trading at, but Dunlap wanted $70. Black & Decker was also interested but again, Dunlap wanted more than it was offering. Unable to get the price he wanted, Dunlap decided to invest by purchasing companies.
On March 2, 1998, Dunlap announced plans to purchase three consumer products companies. Sunbeam acquired 82 percent of Coleman (camping gear) from Ronald Perelman for $2.2 billion. Perelman received a combination of stock and cash, giving him 14 percent ownership of Sunbeam. Sunbeam also purchased Signature Brands (Mr. Coffee) and First Alert (smoke and gas alarms) from Thomas Lee for $425 million in cash, giving Sunbeam 95.7 percent control of First Alert and 98.5 percent control of Signature Brands. Two days after these purchases were announced, Sunbeam’s stock jumped to a record high of $52 a share. With share prices the highest they had ever been and 1997 net income reported at $109.4 million, Sunbeam truly seemed to have turned the corner, at least on paper.
Dunlap publicly praised himself and his "Dream Team for Sunbeam" for turning around the failing company within seven months of taking over. He was so pleased with Sunbeam’s turnaround that he added a new chapter to his book, Mean Business, detailing the turnaround. The chapter, "Now There’s A Bright Idea. Lesson: Everything You’ve Read So Far About Restructuring Works. This Chapter Proves It—Again" demonstrates his confidence as well as arrogance in his belief that Sunbeam had been turned around because of him. Dunlap stated in the chapter that Kersh and a dozen other people had tried to convince him not to take the position at Sunbeam because it was thought that not even he could save the company. Dunlap disagreed stating where others see the impossible, he sees opportunity.
In the same chapter, Dunlap stated that the tremendous media attention given to the first edition of Mean Business provided an unofficial handbook for Sunbeam employees as well as free publicity for the company. He also mentioned that he did not need to take the position at Sunbeam or with any other company because he is rich. Dunlap’s egotistical opinion of himself and his book did not stop there. A complete section of the chapter was devoted to espousing how the media arrived in full force to cover the promotional tour and signing of his book. Dunlap also mentioned how absolute strangers, including a Greek Orthodox cleric, praised him and his book. An additional paragraph mentioned that he was on top of the most admired CEOs in a survey of business students at U.S. colleges and universities. The concluding paragraph of the chapter summarized Dunlap’s high opinion of himself. It suggested that all CEOs and boards of directors should read his book and run their companies using him as their role model.
In between the self-praise, Mean Business undoubtedly explained Dunlap’s philosophy well. At that time, according to his philosophy and reputation, "Chainsaw Al" succeeded at Sunbeam. He fired thousands of employees, shut down factories and warehouses, and streamlined the company by eliminating 10,500 SKUs and selling businesses unrelated to its core products. He even attained what he considers the most important goal of any business and made money for the shareholders. In February 1998, the board of directors was satisfied with Dunlap’s leadership and signed a three-year employment contract with him that included 3.75 million shares of stock.