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Unisys Corp - After The Merger

million firm services computer

Blumenthal was named CEO of the new firm. He closed several plants and laid off 24,000 employees. Earnings totaled $578 million in 1987. That year, Unisys sold off Sperry's marine operations and Burroughs's Memorex unit. Data Resources bought the firm's computer equipment and services arm. Integration continued as Unisys divested its South African marketing and sales unit for $28 million to Mercedes Information Technologies. The firm also paid $300 million for communications equipment maker Time-plex Inc. and $351 million for office workstations manufacturer Convergent Technologies.

In 1989, Unisys purchased File-Tek, Inc. to gain access to the company's Unix-based storage systems for the financial industry. Unisys also entered the small and mid-sized computer market, using AT&T Corp.'s new Unix operating system for its mainframe machines. The company posted a $639 million loss that year, which was due in large part to the increasing popularity of personal computers, which undercut mainframe computer sales. Unisys began manufacturing its own personal computers as a result. However, financial troubles continued in 1990 as mainframe computer demand took a sharp downturn. After the company posted losses of $436 million and suspended shareholder dividends, Blumenthal resigned. Unisys divested Timeplex for $207 million in 1991. The firm also slashed its workforce by 50 percent, which reduced losses for the year to $1.4 million. Public relations suffered when a federal judge found Unisys guilty of landing U.S. defense contracts via bribery and fined it roughly $190 million.

Hoping it legal and financial woes were a thing of the past, Unisys diversified into information technology (IT) services in 1992. Although it had worked to reduce its reliance on the mainframe industry, the firm did continue to make advances in that arena, including a mainframe machine using CMOS (complementary metal oxide semiconductor) technology, unveiled in 1993. The following year, Unisys landed a $127 million contract from one of the world's leading banks, the Savings Bank of the Russian Federal. Divestitures during 1995 included computer-aided design operations to Cadence Designs and aerospace and defense operations to Loral for $862 million. The company also purchased European software vendor Topsystems International, folding it into a new software unit known as Usoft. A restructuring of operations into three business units allowed the firm to focus on its services arm. One unit, Information Services Group, offered consulting, outsourcing, and enterprise systems integration.

Layoffs continued in 1996 when the firm reduced its workforce by 20 percent. On a more positive note, Unisys launched its ClearPath 61000, a multiprocessing system for Pentium processors that allowed clients to integrate Unisys applications with UnixWare and Microsoft Corp.'s Windows NT. Despite several restructuring efforts, the firm remained burdened by $2.3 billion in debt, partly the result of its 1986 merger. In 1997, the firm named Robert Brusk its new chief financial officer and appointed former Arthur Anderson CEO Larry Wienbach as CEO. By then, services accounted for more than 60 percent of sales.

Cellular multiprocessing technology, which boosted the capabilities of Windows NT, was unveiled in 1998. In effort to reduce debt, Wienbach decided Unisys should take a one-time charge of $1.1 billion—related to the 1986 merger—which resulted in a fourth-quarter loss of $947 million. He also contracted Hewlett-Packard Co. to handle the firm's personal computer production, wanting to focus efforts on services. In May, Unisys secured a $600 million contract from Dell Computer Co. to provide IT services to Dell's corporate and government clients. Wienbach's efforts appeared to pay off according to a November 1999 InformationWeek article that described Unisys as "a $7 billion former mainframe manufacturer whose big moneymaker has become sales and service of hardware with Intel processors running Windows NT."

The firm established its e-business unit, known as e-@action Solutions, in 1999. By November, e-business sales accounted for 18 percent of total revenues, and Weinbach announced his goal of tripling that percentage over the next three years. In 2000, the firm distanced itself further from low-end hardware manufacturing via outsourcing and divestitures. In 2001, Unisys launched a new version of its ClearPath server, known as e-@ction Clear Path, which increased compatibility between applications running on Intel Corp. processors and those using proprietary Unisys platforms. Throughout the year, the firm continued to focus on its e-business services.

FURTHER READING:

Gerber, Cheryl. "Unisys Does a Service 180." Computerworld. July 28, 1997.

Markowitz, Elliot. "Even Behemoths Can Bend." Computer Reseller News. January 10, 2000, 14.

Ricadela, Aaron. "Unisys Seeks to Turn Servers Into Mainframes." InformationWeek. November 1, 1999.

Royal, Weld. "Unisys Serves up Services." Industry Week. August 17, 1998.

Schaff, William. "The Prince of Unisys." InformationWeek. October 13, 1997.

"Unisys Corp." In Notable Corporate Chronologies. Farmington Hills, MI: Gale Research, 1999.

Unisys Corp. "Unisys: A History of Excellence." Blue Bell, PA: Unisys Corp., 2001. Available from www.unisys.com.

Vijayan, Jaikumar. "Unisys Pins Hopes On New Servers." Computerworld. April 23, 2001.

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