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In the U.S., ITT's prospects for increasing its communications-equipment business are not so bright, and the main reason is Western Electric's tight grip on sales to A.T. & T.'s operating companies. So at home, as abroad, ITT has aimed at diversity—and Harold Geneen has not spared the company checkbook in the effort. In 1961 Geneen paid $14 million in ITT stock for 43% of American Cable & Radio (ITT already owned the other 57%), followed up with stock-swap acquisitions of Gilfillan Corp., a radar technology company ($16 million), General Controls, a heating-controls manufacturer ($17 million), and Bell & Gosset ($48 million), the biggest of several pump manufacturers that ITT has picked up.
The company has also reached into the fast-growing service industries, picking up St. Louis-based Aetna Finance Co., entering into a joint venture to form the Great International Life Insurance Co., buying up Howard W. Sams & Co., which operates technical schools and holds a majority interest in Bobbs-Merrill publishing house. As the acquisitions get bigger, so does the cost. The price for Avis, the hard-trying auto-rental firm that ITT acquired in early 1965, was $51 million. In recent weeks, Geneen has gone beyond that by reaching agreement to buy out William J. Levitt's construction firm, the world's largest house builder, for $92 million in stock, and Rayonier Inc., a New York-based pulp-products manufacturer, for another $290 million.
How has this breathless expansion affected ITT on the Big Board? The stock has performed well—a $1,000 investment when Geneen took over would be worth about $2,500 today—but not as well as that of a number of other growth companies. One reason is that investors are afraid that the stock paid out for acquisitions—especially the convertible variety—may dilute per-share earnings. Wall Street has accordingly priced ITT ($103⅞ at last week's close) at some 23 times earnings, considerably under the price-earnings ratios of such growth stocks as IBM and Xerox. But Geneen says that the dilution danger is minimal, insists that "the only blueprint for acquisitions is to find environments beneficial to stockholders."
Words in Torrents. No company as vast as ITT could possibly be a one-man show, and Geneen has fleshed out his global supporting cast from 500 to 1,500 executives whose common mission is to keep their boss informed on every major situation. In order to wade through the resulting flood of paper work (what he cannot get to right away he consigns to his omnipresent attache cases), Geneen usually eats lunch in an ITT conference room, often stays on the job until midnight. Still, he is forever pleading with his men to "put your problems out for me." Says Geneen by way of explaining his work load: "I delegate, but I don't abdicate."