Mythic `Chainsaw Al' Turns Spotlight On Sunbeam -- `Turnaround Troll' Grooms Meanie Image

If "Chainsaw Al" Dunlap did not exist, Wall Street would have to invent him.

Jerk, ogre, fiduciary Philistine, able to double small stock prices with the wave of a pink slip, Dunlap embodies both the alleged meanness and the swollen expectations of today's corporate overseers.

The stock levitation at Sunbeam, Dunlap's latest project, seems as bizarre to some analysts as Dunlap's persona as a turnaround troll.

-- Item: Since Dunlap's July arrival as chief executive, Sunbeam stock has risen 133 percent and now sells for more than 100 times this year's projected profits and for 23 times next year's estimates. Even after tripling in the last decade and amazing even the most jaded expert, stocks as a group sell for only about 18 times profits.

Dunlap has "a lot to prove," said Lynne Hyman, who follows Sunbeam for CS First Boston. "The jury's still out."

-- Item: After a visit to the men's room at Brown Brothers Harriman, a starchy New York investment company, Dunlap angrily started pitching rolls of toilet paper into the lobby because they weren't made by Scott Paper, his company at the time.

"I'm thinking, `My job! My job!' " remembers Kathryn McAuley, the Brown Brothers stock analyst who had invited him in.

Fortunately for the economy and the country, Al Dunlap does not exist. Not the Al Dunlap that everybody knows and hates, at least. That Al Dunlap is a figment of his own ego, ghostwriters and publicists.

Many of his antics - like reneging on Scott Paper's $50,000 pledge to the Philadelphia Museum of Art - are carefully calculated for their outrage value, say people who know him.

Dunlap fired Scott's morale officer by saying, "The hell with harmony. Get rid of her," he proudly recounts in his new book, "Mean Business." At another company, he met with the executive committee for the first time, pointed to two managers and said, "You two stay - the rest of you are fired. Goodbye."

Some Dunlap anecdotes are exaggerated. He didn't fire nine members of Scott's 11-person executive committee his first week there, as he told Business Week a year ago. Three members had already announced their retirements; three were removed from the committee but stayed at Scott; four were indeed fired, but after five weeks, not one, Business Week found.

Short of growing a mustache to twirl, Dunlap never misses a chance to curry the world's disapproval.

After being named CEO of household appliance maker Sunbeam, he plugged his book in a conference call with analysts. Lots of companies need to be "Dunlapped," he says.

"He loves to talk a really aggressive game and kind of likes to revel in a chain-saw image," said Brown Brothers' McAuley. "He plays into that because he wants people to look at Sunbeam. He wants people to say, `OK, there's something going on at Sunbeam.' . . . I think a lot of this is about that stage management."

Dunlap is helped by gullible journalists who stretch the statistical span of his venom. Every newspaper reported this month that Dunlap will slash Sunbeam's factory roster from 26 to eight and shed 6,000 jobs. What far fewer said is that 3,000 of those jobs and as many as a dozen of the downsized factories will continue to exist; they'll just be sold to other companies.

People magazine, in an awed Dunlap profile titled "The Terminator," said Sunbeam is "laying off half its 12,000 workers." Taking a tip from AT&T, which exaggerated the size of its own downsizing this year, Florida-based Sunbeam has not taken pains to make this clearer.

Tycoons like Dunlap have always earned public opprobrium in the cause of brandishing power and getting rich. But they've usually had the sense, like J.P. Morgan, to be bothered by the notoriety. Now they nurture it and revel in it.

The more dangerous fiction about Dunlap, say his many critics, is that corporate America has anything to learn from him, that what he does is more than just smoke, mirrors and meatball amputation to get a short-term earnings jag and a stock pop.

Yes, Scott Paper's stock price doubled in Dunlap's year-and-a-half tenure. But so did the stock price at James River, a paper company lacking his presence, in exactly the same period.

What few remember is that Dunlap's term at Scott coincided perfectly with the most spectacular rise in paper prices in years. Everybody made money, and everybody's stock went up.

At Sunbeam, Dunlap says he is resuscitating a deeply troubled company and charging it for the long term.

To test that notion, I called Roger Schipke, Sunbeam's previous chief executive. Schipke, of course, is biased; Sunbeam's owners did not renew his contract, and Dunlap is undoing much of his work. But he's a good Dunlap antidote.

His first point: Sunbeam has earned money in each of the last five years, with net earnings fluctuating between $47 million and $107 million a year. Last year it made $51 million. It is not crippled.

His second point: Don't believe Dunlap's talk about building for the future. Michael Steinhardt and Michael Price, the New York financiers and major Sunbeam shareholders who hired Dunlap, will sell out as fast as possible.

"They're very impatient," Schipke said. "They just wanted to get it over with. They're clearly searching for a quick way to get out of the company rather than build it for the long term."

His third point, echoed by economists and management experts: Dunlap's status as a management model for the United States is, like the number of layoff notches on his briefcase, exaggerated.

Sunbeam wasn't perfect, Schipke said. Some plant closures and downsizing were needed, but they could have been done gradually, partly with attrition, in the way of "most American companies," without "giving half the company notice that they're not going to work there anymore just before Christmas and Thanksgiving."