THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, January 27, 1996 TAG: 9601270240
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BLOOMBERG BUSINESS NEWS
LENGTH: Medium: 59 lines
Unisys Corp., the nation's fifth largest computer maker and a major defense contractor, said Friday it would fire 7,900 workers, about 21 percent of its workforce.
The job cuts are part of a restructuring announced in October.
Unisys has employed several hundred people at two Hampton Roads offices, one on Lynnhaven Parkway in Virginia Beach and another in Norfolk's Koger Executive Center.
It was unclear Friday whether local offices, which for the most part handle defense contracts, would be affected by the cuts. The cuts, however, appear to be aimed at the company's waning computer sales and marketing operations.
A Unisys spokesman declined to say which operations will be closed. About 60 percent of the firings will be in its U.S. operations and 40 percent in Europe, he said. Most will take place in the second and third quarters and should be completed by the end of the year.
Blue Bell, Pa.-based Unisys expects the job cuts and consolidation to reduce annual costs by $500 million by the end of this year and $600 million in 1997.
Unisys, whose predecessor sold the first commercial computers in the 1950s, has been trying to wean itself from computer sales to computer services, as the big mainframes that contribute most of its revenue bow to cheaper work stations and personal computers.
Unlike rivals International Business Machines Corp. and Digital Equipment Corp. who have refocused on PCs and software for revenue, Unisys has few new products to bring in sales, computer industry analysts said.
As a result of the planned layoffs and consolidations, Unisys posted a larger-than-expected fourth-quarter loss of $676.8 million, or $4.12 a share.
``The problem is customers aren't buying big boxes (mainframe computers) like they used to,'' said Bob Djurdjevic, analyst at market researcher Annex Research. ``Ultimately, the lives of vendors like these are going to close.''
Even with Friday's job cuts, investors and analysts are skeptical that Unisys can recover. It's the third attempt in about 13 months to revamp its businesses and cut costs.
``Since we've been through this two times before, one tends to be conservative about the company's projection'' that it will turn itself around, said Michael Geran, an analyst at Pershing, a division of investment bank Donaldson Lufkin & Jenrette Securities.
Because of $2.47 billion in losses between 1989 and 1991, Unisys' stock fell from a high of 48 1/4 in August 1987 to a low of 2 1/4 in July 1990.
In trading Friday, Unisys fell 1/8 to $7 a share on the New York Stock Exchange.
KEYWORDS: LAYOFFS DEFENSE CONTRACTOR by CNB