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April 22, 1987

SPERROUGHS MERGER GOING EVEN BETTER THAN EXPECTED AT UNISYS – BLUMENTHAL

By CBR Staff Writer

Unisys Corp chief executive W Michael Blumenthal talked to the Dow Jones news service just before the company’s figures came out on Tuesday, showing earnings of $1.71 a share and surpassing both internal expectations and Wall Street estimates (CI No 666). Blumenthal commented that his company’s return on equity will be between 13% and 14% this year, which is quite a bit better than either of the two companies has been able to do in recent memory. Blumenthal did admit that the increases were partially attributable to the weakness of the dollar abroad. Echoing the philosophy that drove Honeywell in the mid-1970s, Blumenthal believes that Unisys’ success stems from the fact that the company has reached a critical mass after the Burroughs-Sperry merger. He cited as one example of the combined companies’ new joint abilities the signing of a major agreement with the Hong Kong & Shanghai Bank: according to Blumenthal, Burroughs’ service unit would have been too small to win the bid on its own. Blumenthal also commented on design sharing between the two units; he said that Burroughs cooling technology is used in some Sperry mainframes. Job reductions are also going as planned; employment was cut by 7,000 by the end of the quarter and 12,000 could be gone by the end of the year. Blumenthal did however add a word of caution. Although he expects large increases in turnover by the end of 1988, he commented just because we had a good first quarter doesn’t mean things will continue to improve as we go along.

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