NEW CHIEF STRIVES TO BRING IRI INTO TECH WORLD OF TODAY

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Information Resources Inc., one of the early contributions to the technology world, is looking almost rusty these days.

A pioneer in developing scanner-based tracking of consumer spending in grocery stores, IRI has posted five years of inconsistent earnings and faces heightened competition from its reinvigorated archrival, ACNielsen Corp.

The No. 2 purveyor of market information to such consumer products giants as Procter & Gamble Co. and Anheuser-Busch, IRI now is preparing for an overhaul under new CEO Joseph P. Durrett.

Mr. Durrett, 54, the former head of Broderbund Software and a longtime senior executive at Kraft Foods who also served at Procter & Gamble Co., took the reins of the troubled company in May, after the 1998 resignation of longtime IRI CEO Gian Fulgoni.

REORGANIZING

Mr. Durrett's first priority is to trim a bloated infrastructure that hasn't been reorganized since the company's founding in 1977. Analysts estimate the overhaul could result in the elimination of 400 jobs -- 10% of IRI's 4,000-person U.S. workforce.

"Any new CEO in this situation is definitely not going to want to start a new year without these changes being made," said James Dougherty, an analyst with Prudential Securities, who said he expects $20 million in cost savings.

Beyond cost-cutting, Mr. Durrett faces a more intractable problem: how to spur growth as a supplier to the mature consumer products industry.

With the universe of food and personal care product marketers expected to contract, Mr. Durrett must find ways to sell them more products -- tools to help further dissect the raw data they buy from IRI.

So, Mr. Durrett is pushing a new generation of software. IRI's IntroCast helps a company develop and introduce new products, looking at the success rates of similar entries and taking into account the company's cost structure.

"The growth will come," said Mr. Durrett. "There is a host of new things we're going to do."

ONLINE RESPONSES

IRI also has begun tracking a new domain -- consumer responses to advertising on the Internet, where competition among market researchers is likely to heat up.

The research company was a pioneer in the 1980s and early '90s with its InfoScan service, which uses bar-code scanner data from grocery store registers to track sales and market share trends. Its household panel business tracks consumer purchases in homes.

"They were the innovator in the industry five or six years ago," said Robert Blattberg, a professor of marketing at Northwestern University's J.L. Kellogg Graduate School of Management. Lately, he said, "they've had a lot of trouble differentiating themselves" from Nielsen.

A SLUGGISH STOCK

IRI's troubles are reflected in its stock price, hovering around $11, down from a high near $40 in late 1993. Still, sales have improved, rising 12% in 1998 to $511.3 million -- a figure one-third that of Nielsen's.

Last year's results capped a string of unsatisfying years, paving the way for Mr. Fulgoni's resignation and the subsequent overhaul of the board of directors after a particularly disappointing third quarter.

Mr. Fulgoni could not be reached for comment.

Once the leader in developing analytical modeling tools to help customers evaluate the data it gathers, IRI let Nielsen catch up, Mr. Blattberg said.

While the two companies' businesses run neck and neck in the U.S., Nielsen -- owned by Dun & Bradstreet Corp. until its 1996 spinoff -- was able to establish the leading position overseas.

IRI spent heavily to counter Nielsen's lead in Europe, becoming so strapped for cash it was forced to raise $100 million through a divestiture.

It has yet to post a profit in Europe, which generates about 20% of its revenue. Losses are narrowing, though, and Mr. Durrett said he's confident three new board members, all with global experience, will help IRI continue its international push.

He expects to break even in Europe by the end of 2000.

LEGAL WOES

Still unresolved is the outcome of a 1996 antitrust lawsuit against Nielsen that charges anticompetitive practices, primarily in Europe. IRI is seeking damages of $350 million, which could be tripled under antitrust statutes.

The case, filed in U.S. District Court in New York, has not yet gone to trial.

"It is not a concern," said Steve Schmidt, president of Nielsen's U.S. business.

IRI also has its problems at home.

"I don't see anything that they excel in anymore," said Charles Obusek, VP-brand and marketing information with Dr Pepper/Seven Up, a unit of Cadbury Schweppes, which switched to Nielsen from IRI in March. IRI's account service fell short and data delivery was slow, he said.

Mr. Durrett, who contended "there's an awful lot we can do to improve communications," has hired Boston Consulting Group to work on cost-cutting and operating improvements.

Longtime IRI board member Leonard Lodish, a professor of marketing at the University of Pennsylvania's Wharton School, is upbeat: "I think if you look at consumer package-goods companies, there's certainly a lot more opportunity to improve marketing, sales and distribution. If we can do that, we'll get paid for it."

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