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February 7, 1988

A TALE OF TWO EUROPEANS: NIXDORF INVESTS FOR CONTINUING HEALTH THROUGH HARD TIMES

By CBR Staff Writer

Nixdorf Computer AG, Paderborn, West Germany, invested a total of $940m in 1987 to position itself for future growth, president Klaus Luft told an international gathering of journalists at the Winter Sports Centre in Davos, Switzerland last week. The unusually high rate of investment was equivalent to over one quarter of the company’s turnover of $3,200m, up 13% over 1986. The investment went mainly toward expanding service facilities, adding production capacity, and bolstering its technology resources. The announcements, the second in Nixdorf’s dance of the seven veils, which will culminate on April 19, when all will be revealed regarding 1987 performance, including the profit figure, included news that Nixdorf invested $440m in plant and equipment last year. In addition to opening a manufacturing facility in Singapore, it expanded production capacity at its German plants in Berlin and Paderborn and at the ones in Ireland and Spain. Expenditures for research and development increased to $280m, representing about 9% of turnover. Most of the 3,900 new employees taken on during the year, said Luft, were hired to expand the customer support side, including field service, consultancy and software production – 800 employees joined the software division alone last year bringing the total working on development and maintenance of applications to 4,300. Luft expects the company to create still more jobs in 1988, but at a significantly lower rate than in 1987 – last year’s increase did not come cheap, education of new employees being a major expense. Breaking down the $3,200m turnover figure, business in the home West German market grew by 16%, but international markets, where revenues rose by 8%, were influenced by changes in key currency exchange rates, without which international business would have increased by 15%. Luft admitted that with the world currency turmoil, the company would likely not achieve its objective of doubling sales between now and 1990. But the decline in the dollar was not all bad: some manufacturing is done in the dollar zone, and the weak dollar will make investment in Europe much more expensive for the US computer giants that are Nixdorf’s competitors. On the product front, more than 5,000 8818 PABXs were sold in 1987 in 14 countries – more than the total sold previously since the product was launched about five years ago. Nixdorf sees the move to adopt Integrated Services Digital Networking leading to a major new business opportunity for its telecom arm.

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