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Wang Laboratories, Inc.

Wang Laboratories, Inc.

One Industrial Avenue
Lowell, Massachusetts 01851
U.S.A.
(508) 459-5000
Fax: (508) 452-0896

Public Company
Incorporated: 1955
Employees: 13,000
Sales: $1.9 billion
Stock Exchanges: American Zurich Basel Geneva Lausanne

Wang Laboratories, Inc. is a worldwide provider of computer-based office information processing systems including data, text, image and voice processing systems, as well as networking products. Wangs business activities also include consulting, support, and training services in addition to customer services which help businesses reengineer offices to improve productivity and quality. In 1992, despite $1.9 billion in sales, Wang posted a net loss of $139 million and began operating under the protection of Chapter 11 of the United States Bankruptcy Code.

Wang Laboratories traces its origins to the early 1950s when An Wang started an unincorporated research development company to provide services in the areas of specialized electronics and digital equipment. Originally An Wang had no plans to develop and build computers. He had left his native China in 1945 to study applied physics at Harvard University, where he earned his doctorate in 1948. After graduation Wang performed postdoctoral work at Harvards Computational Laboratory, where he invented the magnetic pulse memory core which was to become a standard component of computers during the next 20 years. In 1951 Harvard announced that it was suspending computer research, and Wang left the university. With no contracts and no orders, he started Wang Laboratories later that year, operating with only $600 in capital. The companys early focus was the development of specialized electronic and digital equipment which would utilize Wangs magnetic core.

Wang Laboratories initially sold magnetic cores and provided contractual services to perform research and development. An Wang was his own salesperson and frequently attended electronic trade shows, attempting to drum up business. In 1952 Wang secured a contract to custom design a synchronizer and counting device for a Cambridge, Massachusetts, company called Laboratory for Electronics. Also during this time, An Wang offered IBM a license on his pending patent of the magnetic memory core. This began four years of negotiations on a patent sale. Meanwhile, Wang had been contracted by IBM to devise a method for using magnetic cores to perform memory functions for IBMs electronic calculating machine. Wang was awarded a patent on the core just weeks after it was sold to IBM in 1956. Years later, An Wang suggested that IBM had encouraged a challenge to the patent claim in order to hasten a sale.

When Wang Laboratories incorporated in 1955, An Wang was registered as president and treasurer. Following the patent sale to IBM, the companys focus gradually began to shift from consulting to development and sales of its own products. The transition ultimately proved fruitful, but the mid-1950s were also a time that An Wang later admitted was fraught with business mistakes.

In the late 1950s Wang was busy with a number of government contracts, an area Wang Laboratories still serves despite product strategy transitions. In the course of fulfilling one such contract with the United States Air Force, the company developed an angular encoder to measure cloud cover. This technological breakthrough in the application of transistors spurred the advance of Wangs encoders and also aided in the development of automated control systems for companies producing and using machine tool makers.

By the late 1950s Wang Laboratories was marketing various types of control units sold under the brand name Weditrol (Wang Electronic Digital Control Units). In the last two years of the decade the fledgling company of about 20 employees produced 60 to 80 of those units annually and sold them for about $700 each.

Needing funds for expansion, Wang entered into an agreement in 1959 with Warner & Swasey Company, a machine tools company based in Cleveland, Ohio, that was purchasing Wangs control systems. An Wang forfeited 25 percent of the companys holdings to Warner & Swasey in return for a $50,000 equity investment and another $100,000 to be made available for short-term loans. I regretted the alliance almost at once, Wang later wrote, noting he had given up too much control for too small a price.

During this period Wang also lost the exclusive right to manufacture a semi-automated hyphenating phototypesetting machine it had developed. In the late 1950s Wang agreed to design and build the machine for Compugraphic. The product was cheaper than fully automated systems already on the market. At the time the only phototypesetters able to justify text were extremely expensive, costing upwards of $1 million. Wangs hyphenating process could greatly increase the productivity of newspapers, such as those served by Compugraphics equipment. The finished product was dubbed Linasec, and Wang Laboratories received about $30,000 for each machine Compugraphic sold. Even though Wang retained the patent on the Linasec, Compugraphic retained the right to manufacture the machines without making royalty payments.

In the early 1960s Wang explored a new direction, developing its own sales organization to sell products directly to users. To accommodate the growth of the company, operations moved first to Natick, and then Tewksbury, Massachusetts. The first truly successful year for the Linasec machine was 1963, when the company recorded $300,000 in sales. Linasec revenues more than doubled in the next two years, allowing Wang in fiscal 1964 to exceed $1 million in sales for the first time.

Wangs greatest success of the decade concerned the creation of its landmark LOCI and 300 series programmable calculators. The LOCI debuted in 1965 and was the companys first electronic scientific calculator. It also spurred the creation of the desk calculator market, where Wang held almost sole proprietorship for much of the late 1960s.

While Wang dominated the new desktop calculator market, the company again found itself in need of capital for further expansion and repayment of short-term loans. In 1967 Wang went public and sold 210,000 shares of common stock through the New York Stock Exchange. The company was by then a well-known leader in the electronic desktop calculator field. The stock offering shared top billing in the media along with President Lyndon Johnsons proposed tax increase in July 1967. That year Wang established its presence overseas and ultimately located sales, service, and administrative offices in Europe and Asia, as well as in the United States and Canada.

Foreseeing competition in the calculator market, Wang made its first attempt to build a computer in 1967. The computer was inadequate, largely a result of Wangs minimal programming experience. The following year the company acquired that experience when it purchased Phillip Hawkins, of Arlington, Massachusetts, at that time the states largest supplier of data-processing services.

While some of Phillip Hawkinss staff left the company shortly after the $7.4 million purchase, the deal did bring Wang the programming experience needed to build computers. In 1970 the company announced it would enter the computer market with the 3300 model. This model also had drawbacks, and it was not until the introduction of the 2200Wangs fourth computerthat the company successfully penetrated the minicomputer market.

An Wang still held control of the company he founded, and despite internal disagreements, the company decided to gradually begin withdrawing some of its less developed and lower priced calculators from the market in order to prepare for a total withdrawal from the calculator market. Nevertheless, Wangs success in the calculator market continued while the company developed its first computers. In 1969 Wang posted a 40 percent sales increase over the previous year and had more than 1,000 employees. In 1970, the huge success of calculators helped the company record its first year of $25 million in sales.

The period between 1970 and 1975 was a time of word-processing and computer product introductions, but it was also a period of unstable earnings. Wang introduced into the word processing market the 1200 BASIC, an electronically controlled dual-cassette typing system dependent on an IBM typewriters internal workings to serve as a terminal. Performance problems with the 1200 arose during its first year on the market, and Wang saw its first quarter of declining revenues in 1973.

This situation worsened with the oil crisis in 1973. The year before, various packages sold to automobile dealers had accounted for 70 percent of Wangs business. When the bottom dropped out of the automotive sales market, Wang also suffered greater losses. In 1975 the company periodically took out bank loans, reduced salaries, and, for the first time, laid off workers.

The following year, however, the company made an impressive turnaround, with growth stimulated by sales of Wangs new computer systems. Then, in 1976, the introduction of a cathode ray tube (CRT)-based wordprocessing minicomputer finally gave Wang a significant corporate presence and propelled the company into the office-computer market.

Wang strengthened its marketing efforts during this time and launched a three-month television advertising campaign in 1978, portraying Wang as David and IBM as Goliath. Wang, then the 32nd largest computer maker, was second only to IBM in television advertising.

By the end of 1978 Wang claimed to be the largest worldwide supplier of CRT-based wordprocessing systems and the largest supplier of small business computers in North America. Beginning in 1978, Wang also began increasing its assets through a number of acquisitions, including a partial purchase of InteCom Inc. in 1984 that was completed two years later. Other acquisitions included the 1978 purchase of Graphic Systems and the 1988 purchase of Informatics Legal Systems. Later minority interest purchases included U.S. Satellite Systems, in 1982, and Telenova, in 1985.

Between 1979 and 1984 Wangs revenues skyrocketed 61 percent annually. Meanwhile, the company made a further commitment to the development of word processing and data processing products, increasing its research and development budget from $3 million in 1976 to $160 million in 1984. During this growth surge, Wang also broke into the Fortune 500 market, and by 1983 nearly half of company revenues were generated by Fortune 500 customers.

This eight-year period, the longest running period of consistent financial growth in Wangs history, was also marked by continual developments in improved product lines. Later products took direct aim at IBMs large portion of computer market revenues. Wangs VS (virtual storage) computers were introduced in 1977, its Office Information Systems series was introduced in 1979, and its Integrated Information Systems line was introduced in 1980.

Wang continued to cut into IBMs market share in the 1980s. In 1980 a word processor designed to compete with an IBM model was introduced. The battle was enhanced by a price reduction in 1981. That same year Wang introduced office machines that transmit voice as well as data. The following year a Wang personal computer debuted, taking aim at IBMs dominance in that market. By 1984 Wang was committing itself to marketing products that allowed its computers to be compatible with IBM software and PCs.

Ten years after Wang left calculators for computers, a computer-market recession hit, sending profit margins into a nose dive. After reaching $1 billion in sales in 1982, and $2 billion in sales in 1984, sales plummeted in the third quarter of 1985, with Wang posting its first decline in ten years. Wang responded to a net income falloff of 66 percent by announcing a layoff of 1,600 (five percent) of its workers, and pay cuts for executives.

Wangs attempts to penetrate IBMs market in the 1980s often resulted in costly setbacks. Critics suggested that Wang had been too slow to respond to the growth of personal computers, clinging to its once-heralded minicomputers of the late 1970s, which by the late 1980s were being pushed aside by the smaller and sometimes more powerful personal computers. The company also had a poorly regarded service division, which failed to keep pace with sales and development.

In 1983 John F. Cunningham was named president of Wang, while An Wang remained chairperson and chief executive. Cunningham had been at Wang since 1967 and made his mark promoting office automation. But beginning in the mid 1980s, Wang had begun to lose its high-growth momentum, with rapid technological advances resulting in new personal computers and more powerful workstations that cut into the market for Wangs minicomputers. Consequently, the company underwent a number of organizational changes spurring the resignations of top-level management. In July 1985, amid news of sharply declining revenues, Cunningham resigned. Cunningham later said his resignation was precipitated by a suggestion from An Wang that the founder had chosen his son, Fred Wang, as the future leader of the company. Following Cunningham out the door was Executive Vice President Jon A. Kropper.

After Cunninghams resignation, An Wang briefly reassumed the duties of president and quickly became more visible in company operations. During a reorganization of the companys marketing division in the spring of 1986, Wangs top marketing executive, J. Carl Masi, Jr., resigned and, like Kropper and Cunningham, went on to head a smaller computer firm. Later that year Fred Wang, then serving as treasurer, was named president. Under Fred Wang profits fluctuated, with the company earning modest profits in 1986 only to lose $70 million during his first full year in 1987, despite the introduction of Wangs Integrated Imaging Systems which would eventually be highly regarded in the industry. In 1988, company losses grew to $92 million.

By the end of the companys 1989 fiscal year in June, Wang was posting an annual loss of $424 million, and the companys cash flow troubles had reached a point of crisis. While most computer companies funded their growth by issuing stock, An Wang had chosen to use debt, thereby avoiding further dilution of family control of the company. By August 1989 that debt had squeezed the company and caused a series of conflicts from its bankers. Under mounting pressure from creditors to reverse the companys downward earnings plunge, in August 1989 An Wang removed his son as president and named Richard W. Miller, the former head of General Electric Companys consumer electronic business, to replace Fred Wang, who remained a company director. Miller, who inherited over $1 billion of debt including $575 million in bank loans, quickly announced plans to overhaul Wang by cutting layers of executive bureaucracy, selling off nonstrategic assets and pushing Wang into budding markets it had ignored.

In December 1989 Miller announced a sweeping change in Wangs product strategy which would embrace established software standards in an attempt to broaden the companys markets. Marking a fundamental shift from Wangs traditional focus on proprietary-designed computers, the new strategy emphasized the compatibility of its personal computers within the industry as well as larger business computers based on the standard version of UNIX software. The company also announced it would continue its proprietary VS minicomputer line, adapting the older products to its new strategy.

Wang began 1990 by laying off 2,000 employees, the first in a string of massive personnel cuts. The company also entered the new decade having sold, under Millers direction, over $200 million in assets including leasing, real estate and overseas manufacturing subsidiaries.

In March 1990 An Wang died, and Miller was named to the additional posts of chairperson and chief executive. By the end of its 1990 fiscal year, Wang had also sold its financial information business and eliminated a total of $600 million in nonessential businesses, reduced its bank debt to $30 million, and cropped $455 million off of its annual expenses. Despite 1990 sales of $2.5 billion, the company closed its books for the year reporting a record net loss of $715.9 million, with over half of that loss attributed to restructuring and special charges stemming from discontinued operations.

By the end of August 1990 Wang had completely eliminated its bank debt, won the biggest contract in its history a U.S. State Department contract worth a potential $841.3 millionand sold InteCom Inc., its premier manufacturer of integrated voice-data switching equipment. In September Wang appeared to have turned things around, and posted its first profit in seven quarters. In line with its new product strategy, Wang introduced two personal computers in November that ran on the industry-standard UNIX operating system. But a continued weakening in the computer market resulted in second and third quarter losses in fiscal 1991, and Wang announced additional layoffs, reducing its workforce to 18,000.

In March 1991 Wang introduced its Office 2000 marketing strategy, aimed at developing products which would provide the company with potential for future growth. The strategy involved the companys well-received imaging software, capable of turning paper documents into electronic pictures, and other software and consulting services aimed at improving white-collar productivity.

In June 1991 Wang reached an agreement with IBM to resell computers made by its former rival. Wang agreed to sell IBM personal computers and IBMs RS/6000 workstations, which Wang would equip (under a Wang label) with its imaging and office productivity software, and sell IBMs proprietary AS/400 line of computers under IBMs label while designing software systems making it easy for Wangs VS line customers to convert to IBMs AS/400 line. In turn, IBM agreed to invest $25 million in Wangs operations which could be converted to a three to four percent stake in Wangs Class B stock, with an option to invest an additional $75 million.

The alliance with IBM resulted in a further refinement of Wangs product strategy, with the company adopting its present focus of developing office automation and document software for its business and governmental clients. Although Wang announced it would continue designing, marketing, and servicing its line of proprietary midrange computers, under its refocused plan a larger percent of Wangs development and sales efforts were directed toward IBM hardware and industry-standard systems.

In the wake of the newly-forged pact with IBM, Wang announced plans to reduce its work force in July 1991 by an additional 3,000, cutting the number of employees to less than 15,000. Miller also restructured the company into three divisions: information systems, designed to serve Wangs existing customer base and to sell both Wangs VS lines and new IBM products equipped with Wang software; personal computer systems, a new departure for the company, aimed at selling PCs through mass merchandisers; and Office 2000 systems, to guide Wangs future growth by improving its document management software and expanding on its imaging technology.

For fiscal 1991 Wang posted its third straight annual loss of $385 million, on sales of $2.09 billion. In August 1991 the company announced it would market a series of Wang personal computers through Service Merchandise Companys general merchandise catalogs and 350 stores. That same month the company won a major patent suit against two Japanese semiconductor makers, NEC Corp. and Toshiba Corp., expected to be worth $8 to $12 million annually. In the judgement, a federal jury upheld Wangs patents for single inline memory modules (SIMMs) that offer a method of placing memory chips in personal computers compatible with IBM products. Following the victory, Wang began licensing SIMMs to other computer manufacturers.

In December 1991 Wang sold its network service operations, which had been a major part of Wang Information Service Corp, a wholly owned subsidiary and provider of data communications networks for businesses and government agencies. The following month the electronic mail portion of the subsidiary was sold.

Wang entered 1992 having posted two consecutive quarters of narrowed losses, marking the first time in two years Wangs revenue had increased from a preceding quarter. During the first half of 1992 Wang introduced several new products reflecting its refocused business strategy. Its voicemail servers for voice mail networks, designed to work with Wangs communications, imaging, and computing applications, put Wang in a position to compete in the standalone and integrated voice systems market. The company also introduced its new Alliance series of personal computers for home and home-office use, signing Wal Mart Stores Inc. to carry the models. For Wangs older customers, a new VS minicomputer was introduced that provided 50 percent more power than its previous top-of-the-line proprietary models. Wang also introduced document imaging software, UNIX OPEN/image, designed to run on a wide variety of office systems, including Wang RISC Series systems running AIX, Wang VS, IBM CICS and IMS/DC, DEC VAX/VMS, Microsoft Windows, and on Digital Equipment Corporations computers.

On the heels of a 1992 fiscal year loss of $139 million, Wang filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code in August 1992. Under Chapter 11, the company was allowed to continue operating under the supervision of bankruptcy court, while financial obligations at the time of filingincluding about $500,000 of debtwere deferred until the company should emerge from Chapter 11. This is a drastic step that I deeply regret, said Miller at the time of the announcement, but it is one that is absolutely crucial to our companys survival.

Whether Wang succeeds in its turnaround efforts depends largely on how customers react to its Office 2000 strategy and related software. If successful, the strategy will help Wang to reinvent itself as a software and services company with a mission of revolutionizing the way offices work. As it endeavors to emerge from Chapter 11, Wang hopes to build on its established leadership position in creating the paperless electronic office by focusing on continued development of advanced software products and systems that streamline and accelerate the flow of work and the sharing of information through open computer systems networks that can accommodate numerous vendors hardware, including Wangs own systems.

Although An Wangs family controls about 37 percent of the company and three family members serve as directors, Wangs operations are largely out of family hands. In announcing Wangs decision to file for Chapter 11 protection, Miller said he envisions a company that will emerge from Chapter 11 as a smaller, more focused and more competitive company, with revenues of about $1.4 billion and about 8,000 employees, down from 13,000 at the time of Wangs filing for bankruptcy.

Principal Subsidiaries

Wang Informatics Legal and Professional Systems, Inc.; Wang Information Services Corp.

Further Reading

Williams, Gary, Wangs Turnaround Specialist Prepares For Surgery, Business Week, December 11, 1989; Cohen, Daniel, The Fall of The House of Wang, Business Month, February, 1990; McWilliams, Gary, Mini Solution, Maxi Risk for Wang, Business Week, July 1, 1991; Rifkin, Glenn, Wang Strives To Get on Feet, The New York Times, April 8, 1992; Kenney, Charles C, Riding the Runaway Horse: The Rise and Decline of Wang Laboratories, Little, Brown and Company, 1992.

Roger W. Rouland

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Wang Laboratories, Inc.

Wang Laboratories, Inc.

One Industrial Avenue
Lowell, Massachusetts 01851
U.S.A.
(508) 459-5000
Fax: (508) 452-0896

Public Company
Incorporated: 1955
Employees: 26,796
Sales: $2.87 billion
Stock Exchanges: New York Zurich Basel Geneva Lausanne

Wang Laboratories was started in the early 1950s as a one-man unincorporated research-and-development company providing services in the areas of specialized electronics and digital equipment. From this beginning Wang evolved into a pioneer in the calculator market as well as in niche markets of word processing and small business computers. Today Wang markets, designs, and manufactures computers and peripheral equipment, specializing in office automation.

Founded in 1955 by An Wang, Wang Laboratories originally had no plans to develop and build computers. Wang had left his native China in 1945 to study applied physics at Harvard, where he earned his doctorate in 1948. After graduation Wang performed postdoctoral work at Harvards Computational Laboratory, where he invented the magnetic pulse memory core which was to become a standard component of computers for the next 20 years.

Wang left the Harvard laboratory in 1951 after the institution announced it was suspending computer research and founded his own company later that year. The company focused on the development of specialized electronic and digital equipment which would utilize Wangs magnetic core. When Wang began his business he had no contracts and no orders, only a $70-a-month office in Boston and $600.

Wang Laboratories initially sold magnetic cores and provided contractual services to perform research and development. Wang was his own salesman, and frequently attended electronic trade shows attempting to drum up business. In 1952 Wang secured the first of many consulting contracts to custom design digital equipment when the company was hired to develop a synchronizer and counting device for a Cambridge, Massachusetts, company called Laboratory for Electronics.

Wangs first encounter with International Business Machines Corporation (IBM) came long before Wangs entrance into the computer market. In 1951 An Wang had offered IBM a license on his pending patent of the magnetic memory core. This began four years of negotiations on a patent sale. Meanwhile, Wang had been contracted by IBM to devise a method for using magnetic cores to perform memory functions for IBMs electronic calculating machine. Wang was awarded a patent on the core just weeks after it was sold to IBM in 1956. Years later, An Wang suggested that IBM had encouraged a challenge to the patent claim in order to hasten a sale.

When Wang Laboratories incorporated in 1955, An Wang was registered as president and treasurer. Following the patent sale to IBM, the companys focus gradually began to shift from consulting to development and sales of its own products. The transition ultimately proved fruitful, but the mid-1950s were also a time that An Wang later admitted was fraught with business mistakes.

In the late 1950s Wang was busy with a number of government contracts, an arena Wang Laboratories still serves despite the companys transition to computers. As a result of one such contract with the United States Air Force, the company developed an angular encoder to measure cloud cover. This technological breakthrough in the application of transistors spurred the advance of Wangs encoders and also aided in the development of automated control systems for companies producing and using machine tool makers.

By the late 1950s Wang Laboratories was marketing various types of control units sold under the brand name Weditrol (Wang Electronic Digital Control Units). In the last two years of the decade the fledgling company produced 60 to 80 of those units annually, and sold them for about $700 each.

With funds needed for expansion, Wang entered an agreement in 1959 with Warner & Swasey Company, a Cleveland, Ohio-based machine tools company which was buying Wangs control systems. An Wang forfeited 25% of the companys holdings to Warner & Swasey in return for $50,000 worth of an equity investment and another $100,000 to be made available for short-term loans. I regretted the alliance almost at once, Wang later wrote, noting he had given up too much control for too small a price.

During this period Wang also lost the exclusive right to manufacture a semi-automated hyphenating phototypesetting machine it had developed. In the late 1950s Wang agreed to design and build the machine for Compugraphic. The product was cheaper than competing fully automated systems on the market. At the time the only phototypesetters able to justify text were extremely expensive, costing upwards of $1 million. Wangs hyphenating process could greatly increase the productivity of newspapers, such as those served by Compugraphics equipment. The finished product was dubbed Linasec, and Wang Laboratories received about $30,000 for each machine Compugraphic sold. Even though Wang retained the patent on the Linasec, Compugraphic retained the right to manufacture the machines while immune to royalty payments. Wang closed out the decade with about 20 employees.

In the early 1960s Wang embarked on a new direction and developed its own sales organization to sell products directly to users. The company was growing, and to accommodate the growth it moved twice during this timeto Natick, and then Tewksbury, Massachusetts. The first big year for Linasec was 1963, when the company recorded $300,000 in sales. Linasec revenues more than doubled in the next two years, allowing Wang to exceed $1 million in sales for the first time, in fiscal 1964.

Wangs greatest success of the decade evolved around the creation of its landmark LOCI and 300 series programmable calculators. The LOCI debuted in 1965 and was the companys first electronic scientific calculator. It also spurred the creation of the desk calculator market, where Wang held almost sole proprietorship for much of the late 1960s.

While Wang dominated the new desktop-calculator market, the company again found itself in need of capital for further expansion and repayment of short-term loans. In 1967 Wang went public and sold 210,000 shares of common stock through the New York Stock Exchange. The company was, by then, a well-known leader in the electronic desktop-calculator field.

The stock offering shared top billing with President Lyndon Johnsons proposed tax increase in July 1967. Shares were originally offered at $12.50, but when the Wang shares were finally sold in August, the stock received a sizzling reception. The stock opened the day with a bid of 36 and closed better than four points higher. Wang established its presence overseas in 1967. The company ultimately located sales, service, and administrative offices in Europe and Asia, as well as the United States and Canada.

Foreseeing competition in the calculator market, in 1967 Wang made its first attempt to build a computer. The computer was inadequate though, largely a result of Wangs minimal programming experience. The following year Wang acquired that experience when it purchased Phillip Hawkins, of Arlington, Massachusetts, then the states largest supplier of data-processing services.

While some of Phillip Hawkinss staff left the company shortly after the $7.4 million purchase, the deal did bring Wang the programming experience needed to build computers. In 1970 the company announced it would enter the computer market with the 3300 model. This model, too, had drawbacks, and it was not until the introduction of the 2200 Wangs fourth computerthat the company successfully penetrated the minicomputer market.

An Wang still held control of the company he founded, and despite internal disagreements, the company decided to gradually begin withdrawing some of its less-developed and lower-priced calculators from the market in order to prepare for an eventual total withdrawal from the calculator market.

Meanwhile, Wangs success in the desk-calculator market continued while the company developed its first computers. In 1969 Wang posted a 40% sales increase over the previous year and had more than 1,000 employees. In 1970, the huge success of calculators helped the company record its first year of $25 million in sales.

The period between 1970 and 1975 was a time of word-processing and computer-product introductions, but it was also a period of unstable earnings. The computer industry chuckled at Wangs debut into the word-processing market, the 1200 BASIC, which was an electronically controlled dual-cassette typing system dependent on an IBM typewriters internal workings to serve as a terminal. Performance problems with the 1200 arose during its first year on the market, and Wang saw its first-ever quarter of declining revenues in 1973.

This situation worsened with the oil crisis which struck in 1973. The year before, various auto-dealer packages had accounted for 70% of Wangs business. When the bottom dropped out of the automotive-sales market, Wang also suffered greater losses. In 1975 the company turned to periodical bank loans, reduced salaries, andfor the first timewas forced to lay off workers.

The following year, though, the company made an impressive turnaround, with growth stimulated by sales of Wangs new computer systems. Then, in 1976, the introduction of a cathode-ray-tube (CRT)-based word-processing minicomputer finally gave Wang a significant corporate presence and propelled Wang into the office-computer market.

Wang strengthened its marketing efforts during this time, including a three-month television advertising campaign in 1978 which portrayed Wang as David and IBM as Goliath. Wang, then the 32nd-largest computer maker, was only the second, after IBM, to use television advertising.

By the end of 1978, Wang boasted that it was the largest worldwide supplier of CRT-based word-processing systems and the largest supplier of small business computers in North America. Beginning in 1978, Wang also began increasing its assets through a number of acquisitions, including a partial purchase of InteCom, in 1984. That acquisition was complete by 1986. Other Wang acquisitions included the 1978 purchase of Graphic Systems and the 1988 purchase of Informatics Legal Systems. Minority-interest purchases included U.S. Satellite Systems, in 1982, and Telenova, in 1985.

Between 1976 and 1984 Wangs revenues skyrocketed 61% annually. Meanwhile, the company made a further commitment to development of word-processing and data-processing products, increasing its research-and-development budget from $3 million in 1976 to $160 million in 1984. During this growth surge, Wang also broke into the Fortune 500 market: by 1983, nearly half of company revenues were generated by Fortune 500 customers.

This eight-year periodthe longest running period of consistent financial growth for Wang in company historywas also marked by continual developments in improved product lines. Later products took direct aim at IBMs large portion of computer-market revenues. Wangs VS (virtual storage) computers were introduced in 1977, its Office Information Systems series was introduced in 1979, and its Integrated Information Systems line was introduced in 1980.

Wang continued to move to cut into IBMs market share in the 1980s. In 1980 a word processor, designed to compete with an IBM model, was introduced. The battle was enhanced by a price reduction in 1981. That same year Wang introduced office machines that transmit voice as well as data. The following year a Wang personal computer debuted, taking aim at IBMs dominance in that market. By 1984 Wang had acknowledged that IBM had set the standards, and the company responded by marketing other products that allowed its computers to use IBM software and communicate with IBM PC (personal computer) models.

Ten years after Wang had left calculators for computers, a computer-market recession hit, sending profit margins into a nose dive. After reaching $1 billion in sales in 1982, and $2 billion in sales in 1984, sales plummeted in the third quarter of 1985, with Wang posting its first decline in ten years. Wang responded to a net income falloff of 66% by announcing a layoff of 1,600 or 5% of its workers, and pay cuts for executives.

In the 1980s Wang began to attempt to penetrate IBMs market, which often meant costly setbacks when its attempts went awry. Critics suggested that Wang had been too slow to respond to the growth of personal computers, clinging to its once-heralded minicomputers of the late 1970s, which in the late 1980s were being pushed aside by the smaller and sometimes more powerful personal computers. The company also had a poorly regarded service division, which failed to keep pace with Wangs sales and development. Wang had also made initial, unsuccessful attempts to build a better PC, than IBM, before committing to build computers that were compatible with IBM machines.

During the later half of the 1980s the company underwent a number of organizational changes which brought on resignations of top-level management. John F. Cunningham was named company president in 1983, with An Wang retaining his board chairmanship and position as CEO. Cunningham had been at Wang since 1967, and made his mark promoting office automation. In July 1985, amid news of sharply declining revenues, Cunningham resigned. Following Cunningham out the door less than two months later was Executive Vice President Jon A. Kropper.

An Wang resumed his position as president until he named his son Fred to the position in 1986. That same year the company celebrated its 35th anniversary, with the best news coming early in the year when the company was awarded a $480 million, five-year agreement with the air force mini-computer multi-user program.

After resuming the position of president, An Wang quickly increased his visibility throughout the company and initiated changes which saw marketing executives reporting directly too him. Only a week after reorganizing the marketing division in the spring of 1986, the companys top marketing executive, J. Carl Masi Jr., resigned. Masi, Kropper, and Cunningham, all went on to head smaller computer firms.

Later that year Fred Wang, who was then serving as treasurer, was named president. Under Fred Wang, profits varied, with the company earning modest profits in 1986, then losing $70 million his first full year. Wang reported a $92 million profit in 1988 only to lose $424 million in 1989. While the company continued to upgrade its systems, Wangs U.S. revenues shrunk and the company stayed afloat through overseas sales. By 1989, An Wang was in more control of the companys sales divisions in the wake of a $67 million third quarter loss. The company announced further layoffs and executive pay cuts.

In August 1989 An Wang announced that Fred Wang would resign as president, and later that month Richard W. Miller, a former General Electric executive, was appointed to succeed him. Just a week before the resignation the company announced it had hired an investment-banking firm to raise capital and renegotiate its revolving credit agreements to prevent Wangs creditors from calling in its loans.

During the 1990s Wang began to market information systems to manage all of an organizations business information. The Freestyle system has integrated the computer, handwriting, and use of telephone and facsimile machines into a single system designed to meet all data-processing and communication needs for office workers.

By late 1989 Wang was supporting almost $1 billion of debt, having lost an additional $500 million in 1989. Miller announced plans to overhaul the company, selling off noncore operations, real estate, and leasing operations, and cutting an additional 2,500 jobs.

The Wang family now owns less than 35% of company holdings, although it has retained control of operations through special stock classes. How long Wang Laboratories will be run by a Wang, how Wang will fare in the future, and whether Freestyle will create another new marketing opening, remain uncertain.

Principal Subsidiaries

Wang Credit Corp.; Wang International; Financial Limited (Republic of Ireland); Wang Informatis Legal and Professional Systems, Inc.; InteCom Inc.; Wang Information Services Corp.; Wang Financial Information Services Corp.; Wang Australia Pty. Ltd.; Wang Gesellschaft m.b.H. (Austria); Wang Europe, S.A./N.V. (Belgium); Wang Canada Ltd.; Wang Industrial Co. Ltd. (China); Wang Computer China Limited; Wang (UK) Ltd.; Wang France S.A.; Wang Pacific Ltd. (Hong Kong); Wang Nederland B.V. (Netherlands); Wang Svenska AB (Sweden); Wang Computer Ltd. (Japan); Wang New Zealand Ltd.; Wang de Panama, S.A.; Wang Computers (Pte.) Ltd. (Singapore); Wang (Schweiz) A.G. (Switzerland); Wang Computadoras, Inc. (Puerto Rico); Wang Deutschland GmbH (Germany); Wang Italia S.p.A. (Italy); Wang de Mexico S.A. de C.V.; Wang Europe S.A./N.V. (Luxembourg); Wang Computer Korea, Ltd. (South Korea); Wang Espana, S.A. (Spain); Wang Ireland Ltd.; Wang Latin America, S.A. (Venezuela).

Further Reading

McClellan, Stephen T., The Coming Computer Industry Shakeout: Winners, Losers and Survivors, New York, John Wiley & Sons, 1984; Wang, An, and Eugene Linden, Lessons, An Autobiography, Reading, Massachusetts, Addison-Wesley Publishing Company, 1986; Wang Laboratories: A Corporate Overview, Lowell, Massachusetts, Wang Laboratories, Inc. 1987.

Roger W. Rouland

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