UNISYS CORP.

Blue Bell, Pennsylvania-based Unisys Corp. provides systems integration, network management, technology support, outsourcing, and consulting services to clients in communications, financial services, publishing and transportation industries, as well as to government agencies. Major competitors include IBM Corp. and Computer Sciences Corp. In the late 1990s, the firm shifted its focus away from commodity hardware operations and created the e@ctions Solutions division, which offers, among other things, Web-based services. With sales of $6.9 billion and 37,000 employees, Unisys is working toward of goal of deriving half of its revenues from e-business by the year 2002.

EARLY HISTORY

The foundation for Unisys Corp. was first laid in 1885 when William S. Burroughs invented the arithmometer, an adding machine that records numbers. The following year, Burroughs incorporated his business as American Arithmometer Co. He obtained a patent for his adding machine in 1892, and five years later, the Franklin Institute awarded him the John Scott Medal. The inventor and businessman succumbed to tuberculosis in 1898; however, his business remained operational, being reincorporated as Burroughs Adding Machine Co. in 1905. The company completed its first two purchases—Universal Adding Machine and Pike Adding Machine—three years later. A machine able to both add and subtract was unveiled in 1911. By 1915, Burroughs Adding sold more than 90 different data processing machines, mainly to accountants. Interchangeable parts allowed clients to customize the machines to suit their needs.

Growth continued in 1921 with the acquisition of Moon-Hopkins Billing Machine. Burroughs Adding Machine launched a direct multiplication billing machine and a portable adding machine mid-decade. By 1945, sales had neared the $100 million mark. To better reflect its broadening product line, the firm changed its name to Burroughs Corp. in 1953. Three years later, Burroughs unveiled its first commercial electronic computer and purchased high-speed computer manufacturer ElectroData Corp. The firm diversified into automated office machines in 1958, developing an electronic bank bookkeeping machine known as the Sensitronic. One year later, the firm's president, John Coleman, reached an agreement with RCA to pool financial resources in an effort to better compete with industry leader IBM Corp. However, Coleman died before his plan was implemented. By the end of the decade, the firm had diversified into magnetic ink and automated check-sorting machinery. Sales neared $400 million.

Burroughs launched the B5000 mainframe computer, which used dual processors and virtual memory, in 1961. Six years later, the firm landed a U.S. Department of Defense contract to build the Illiac IV supercomputer. Cost cutting measures implemented in the mid-1960s were blamed for reliability problems with the B6500 computer. As a result, plans for the B8500 computer were shelved until engineers figured out how to fix the glitches. Burroughs completed the Illiac IV supercomputer in 1972. The $30 million purchase of Graphic Services in 1974 gave the firm entrance to the facsimile industry. The following year, Burroughs paid $8.8 million for automatic typewriters and computer equipment manufacturer Redactron. W. Michael Blumenthal, former Bendix chairman, joined Burroughs as executive vice president in 1979. He hired a new management team, discontinued adding machine and calculator operations, and funneled more resources into the firm's repair services. By the end of the decade, sales had reached nearly $3 billion. Blumenthal eventually took over as CEO.

Burroughs unveiled its A Series line in 1981; the technology would prove to be integral in the firm's future development of the ClearPath HMP System. To bolster its effectiveness against rival IBM in the mainframe industry, the company paid $85.2 million for Memorex and $9.6 million for System Development Corp. The purchases boosted sales by roughly $1 billion. In 1985, Burroughs and Sperry Corp. began merger negotiations. Sperry had been founded by Elmer Sperry in 1910 as Sperry Gyroscope Co., a manufacturer of navigational equipment. In 1955, Sperry merged with Remington Rand, maker of ENIAC, "the world's first large-scale, general-purpose computer" and UNIVAC, the ldquo;world's first business computer." Sperry's product launches in the 1960s included the 1100 computer series and the first multiprocessor computer, the 1108. In the 1970s, Sperry acquired RCA's computer operations and developed a cache memory disk subsystem. Its 2200 Series, shipped in 1986, would also play an instrumental role in the development of the ClearPath HMP system.

Both Burroughs and Sperry believed a merger would allow them to reduce costs and fund increased research and development, both of which were necessary to compete with IBM, which boasted revenues ten times those of both firms. Burroughs borrowed $2.5 billion to finance the merger, and the $4.8 billion deal was completed in 1986 when Burroughs and Sperry formed Unisys Corp., the second-largest computer firm in the U.S. Employees from both companies had agreed upon the name, which was essentially an acronym for "United Information Systems."

AFTER THE MERGER

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.

SEE ALSO: E-commerce Consultants; E-commerce Solutions; Integration

Unisys A US corporation formed from Sperry and Burroughs in 1987. It is second only to IBM in revenue among suppliers of mainframes and is also an important supplier of software and services; like many similar companies, it is trying to project itself as a solution provider rather than simply a supplier of hardware. It is number 12 in the list of the world's largest IT companies (1993 figures).