FLYING HIGH OR CRASHING IN 1992.(Business)

Byline: HARRY BERKOWITZ Newsday

To borrow a phrase from Lee Iacocca, 1992 was a year to lead, follow or get out of the way.

The business world's rising stars and crashing meteors were propelled by corporate shakeups and soaring salaries, budget deficits and bankruptcies, price wars and presidential politics.

And amid all the clamor, the personalities who shined most brightly were those who led - or at least quickly adjusted to - the kinds of dramatic changes that rocked not only the U.S. economy and corporate board rooms, but the entire world.

In the computer industry, Microsoft's Bill Gates became the wealthiest American, worth more than $6 billion according to Forbes magazine, by tightening his company's grip on the market for the software that runs the guts of personal computers - even while the industry itself went through bruising price wars.

Another visionary, John Scully, succeeded with a different strategy, pushing Apple Computer into the market for notebook computers for the first time and ending the year as the leader with more than $1 billion in sales, as he tried to reshape the company for a new century.

Super talent agent Michael Ovitz shook not only the advertising world by expanding his role as marketing adviser to Coca-Cola, but also the TV industry by leading multimillion-dollar negotiations for David Letterman with an array of clamoring suitors. Another Ovitz client, Madonna, won a $60 million deal that helped redefine what an entertainment star's contract is all about.

Robert Stempel could not redirect a reeling and bloated General Motors fast enough, so a newly energized board of directors ousted him, setting an example for other corporate boards. Even Chrysler chairman Iacocca had to be nudged aside to make way for a successor, although troubled companies like Trans World Airlines continued to seek out his advice. At American Express, James Robinson agreed to step down after the company experienced a long series of strategic miscalculations, embarrassing mistakes and scandal.

Edward Finkelstein resigned as chairman at R.H. Macy & Co. after a changing retail environment and the massive debt burden of his overly ambitious acquisitions overwhelmed the master merchandiser's blueprint for growth. And at International Business Machines Corp., although John Akers continued to cling to power, he acknowledged that he had been too slow in altering the giant computer maker's course as he announced it would slash tens of thousands of employees.

It was a year in which seemingly immutable institutions were turned on their ears: Texas billionaire Ross Perot confronted the political process, reformist Teamsters chief Ron Carey won a historic union election, director Spike Lee challenged the movie studios and raised extra money from entertainment friends in order to get "Malcolm X" made his way, and former Vanity Fair editor Tina Brown launched a new New Yorker.

"The heroes of the year were those individuals who were savvy enough and skillful enough to launch revolutionary changes in their organizations or in the wider culture," said Charles Fombrun, professor of management at New York University's Stern School of Business and author of "Turning Point," a new book on guiding strategic change in corporations. "The failures were those who were complacent and trapped in the mindsets of yesteryear."

Of course, attempts to impose dramatic change did not always succeed.

Robert Crandall, head of the nation's biggest carrier, American Airlines, tried to force a simplified and less volatile pricing system on the industry, but was shot down. Cut-throat price wars continued as competitors accused Crandall of trying to squeeze some of them out of business. Crandall did, however, successfully lead a group of airlines in lobbying against a British Airways linkup with USAir.

Meanwhile, Carl Icahn, the takeover expert who tried to save TWA with discount business fares and aging planes, had to pull back from running an airline, with expected personal losses topping $100 million.

Over the past three years, the airline industry has piled up $8 billion in losses. One the few winners was Herbert Kelleher, chairman of Southwest Airlines, which made an estimated $100 million in profits this year by avoiding the profligate ways of some competitors. "His low costs are revolutionizing the way the industry does business," said Kevin Murphy, an airline industry analyst at Morgan Stanley.

Some executives failed in 1992 by trying to expand in ways that created a sluggish rather than invigorating mix. Sears, Roebuck & Co. and American Express are offered as examples of that by many experts.

The verdict is still out on such attempts at another conglomerate, Time Warner. Power plays, controversies and the illness and death of guiding light Steve Ross shook up that merged company, which Ross was trying to turn into a global entertainment and communications powerhouse.

Time Warner has been in the news for hit movies, like top-ranked "Batman Returns," performers like Madonna, a failed stock-rights offering, reaction to Ross' whopping pay package, a police backlash over lyrics by rap artist Ice-T, the board's replacement of Nicholas J. Nicholas with Gerald M. Levin as co-chief executive, and a newly announced realignment to create a more independent board.

The company also owns DC Comics, whose most famous character, Superman, shook up the comic world by dying - at least temporarily - and thereby reviving interest in the superhero.

Time Warner's activities have thus drawn the attention not only of movie and music critics, but also of shareholder groups that helped push the company toward installing a more independent board.

Across the business landscape, such groups, no longer satisfied with watching their investments from afar, have urged shakeups in companies whose stocks - and possibly whose leaders - were laggards.

Among the shareholder representatives, people like California Public Employees Retirement System director Dale Hanson and Institutional Shareholder Services gadfly Robert Monks stood out, helping spur radical restructurings or uprisings at such boards as GM, Westinghouse and Sears.

After resisting change fiercely, Sears chairman Edward Brennan has begun to drastically restructure the company. At some companies, the message of shareholder groups was taken up by key board members, including John Smale, the former Procter & Gamble chairman who led the upheaval at GM.

Bankruptcy judges, rather than shareholder representatives, dominated outlooks for some companies, including the airlines TWA, Continental, America West and Metro, and a retailer, Macy's.

Bankruptcy also clouded the fate of the Canadian- based Reichmann family, whose Olympia & York development company is New York's biggest commercial landlord and whose grand visions, including Canary Wharf in London, outraced the ability of shrinking world economies and real estate markets to support them. And bankruptcy cast a pall over the Daily News, as Mortimer Zuckerman continued to negotiate the latest rescue of the newspaper while trying to drastically rewrite employment rules.

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