Smooth sailing so far

Analysts see storms aheads for Lexis-Nexis

Since taking command of Lexis-Nexis on Dec. 1, the Dutchman has vowed to stay the company's course and spend his first few months as new president and chief executive "getting to know the team."

"We could learn a lot from the Japanese," said Gieskes, in one of his first interview since taking the company's helm. "You shouldn't waltz in and start changing things."

But some say change is exactly what Lexis-Nexis needs. As one of the world's largest providers of online legal information and news, it is facing increasing competition from other companies on the Internet. So far, Lexis-Nexis has been slow to face that competition, according to analysts and industry observers.

"I was shocked the last time I was there," said one consultant who requested anonymity. "They sort of live in this bubble and not in reality. All the decision-making power is amassed in Amsterdam and a bunch of technologically clueless ... people could wind up really hurting this company."

Gieskes (pronounced GEES-kuss) arrived at the Miami Twp. company after the sudden departure of Ira T. Siegel, the CEO whose retirement was announced Nov. 17 through parent firm Reed Elsevier plc in London. Insiders say Siegel, a candid Bronx native, had a rocky relationship with Nigel Stapleton, co-chairman of the Reed Elsevier publishing empire. Hinting at that animosity, Siegel angrily rebutted Stapleton's quoted remarks that the outgoing CEO left for personal reasons and that he somehow needed to "recuperate" after a demanding two-plus years at Lexis-Nexis.

Gieskes, 43, has spent nearly half his life in close executive orbit at Reed Elsevier's magazine headquarters in England and Holland. Fluent in four languages and conversant in a fifth, Gieskes tries to communicate a sense of calm after November's stormy changing of the guard.

"I have not formulated a game plan because there is a good game plan in place," he said.

In autumn Siegel told a Dayton Area Chamber of Commerce gathering that Lexis-Nexis faces challenges from smaller, more nimble Internet companies that post much of the same information Lexis-Nexis does, only it's free.

As vice president and later chief executive for Elsevier Science publishing operations in Amsterdam and London, Gieskes said he was using the Internet in the '80s. If Gieskes hears footsteps from other online businesses, he's not admitting it. Moreover, he said the Web offers an entree to Lexis-Nexis's services.

"We're not losing market share to the Web," he said from his new, mostly bare office. "People here (at Lexis-Nexis) have far more reasons to be happy than to be scared of the Web."

Lexis-Nexis, one of the largest divisions within Reed Elsevier, and its flagship in the online world, is supposed to keep its cards close to its corporate vest. Officials are under orders from Reed Elsevier's Anglo-Dutch masters not to reveal revenue expectations, a tenet Siegel violated when he shared with the Dayton Daily News that revenue is expected to top $1 billion this year. Siegel also said revenue grew 12 percent in 1996 but only 6 percent in 1997, and that trend likely would continue into this year.

Gieskes, previously vice chairman of Reed Elsevier's Legal Division and head of Lexis-Nexis's European operations, maintains no layoffs are brewing - something Siegel didn't rule out. He also downplayed the significance of the company's recent decentralization of its four business units.

"You want to have the right resources in the right places," he said, emphasizing that the restructuring was more of a fine tuning than an overhaul.

"Layoffs make it sound like Detroit," he added. "That's not happening here. Maybe we were overdramatizing it."

He said company revenue is healthy, in contrast to Siegel's October admission that growth is "north but on a less dramatic course."

Analysts note that Lexis-Nexis's growth is being fed largely by Reed Elsevier acquisitions, such as the pending merger with Wolters Kluwer NV, a rival Dutch publisher that Reed once made an unsuccessful hostile effort to acquire. If approved, the merger would continue the consolidation trend in the publishing and information service business, a wave that Reed Elsevier has been aggressively riding, particularly in the United States, where demand is strongest.

In June, the company spent $447 million to buy Chilton Co. from Walt Disney Co. Reed plans to fold Chilton's 39 trade magazines into its existing trade-magazine group, Cahner's Publishing Co., to build a library of 130 journals worldwide.

Earlier, Reed struck a deal to acquire MDL Information Systems Inc., a California company that sells databases and software to scientists in the pharmaceutical and chemical fields. In 1996 it agreed with Times Mirror Co. to form a joint venture to buy Shepard's, the legal publisher, from McGraw-Hill Inc.

Maureen Fleming, an analyst with the Gartner Group, a computer consulting firm in Stamford, Conn., said all this growth-by-assimilation has made Lexis-Nexis too complacent.

"Reed, because it doesn't like to compete, is trying to buy the competition," Fleming said. "If you keep buying competition, you don't have to change. Lexis-Nexis is in the technology business, but Reed management has not figured that out."

Gieskes was handpicked and faced no competition for his position. Even if there had been someone else in the running, he said he wouldn't have wanted to know who it was.

His position regarding competition from the Web and the fact he has not articulated his own vision for the company led Fleming to conclude, "He's Amsterdam's eyes and ears."

She said Lexis-Nexis needs to make its service easier to use, needs to focus more on enterprises and not just single users, and needs to bill itself more as a technology company or risk becoming nothing more than a scaled down research institution.

"Lexis-Nexis has no enterprise strategy for licensing content," she said. "People who want (information from Lexis-Nexis) can't get it easily. Lexis-Nexis is not stepping up to the plate with an access point.

"They're going to get their butts kicked from companies like BackWeb, Wayfarer and NewsEDGE/WEB," she predicted, companies that offer custom news and information "pushed" to customers' personal computers.

She said Lexis-Nexis needs to develop and promote filtering technology that allows customers to easily sort through the glut of information on the Web.

"I think that (Gieskes), when he's in the U.S. a little longer, may find himself very shocked," she said. "Unless they significantly change, their business will shrink."

Gieskes said the solution to gaining and keeping customers is reinforcing quality products. Gieskes said he will drive his staff hard to make sales.

"Quality information is never free," he added, sounding very much like Siegel.

Yet Gieskes differs from his predecessor in several respects. Gieskes is planning to move his wife and three children ages 11, 14 and 16 from London to the Dayton area next year. Siegel, 53, a tireless frequent flier for Lexis-Nexis, never took up permanent residence here. Although Gieskes has relatives living in the United States and his family has visited the country, the move may be particularly hard for his middle child, a boy "who has fallen in love for the first time."

Gieskes also whistles a lot.

"If I ever stop whistling, that's when people around here should start worrying," he said, smiling.

Able to wax Anglo and American colloquialisms - "If it ain't broke, don't fix it," is one - Gieskes has an accessible personality. After this interview, he was off to have lunch with the company's warehouse workers.

"I've been here four years and have never seen the warehouse," joked Anthony Sprauve, the company's senior director of corporate communications.

The Gieskes family will trade London for Dayton, leaving behind one of the world's greatest cities for an unfamiliar culture where the schools, food and even road systems are radically different.

Why?

"This is the biggest and most exciting job ever offered me," he said. "I would have been a fool to say, 'Well, I'll think about it.'"

* CONTACT Mike Drummond at 225-2393; or e-mail him at mike_drummond@coxohio.com