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October 25, 1995

UNISYS SAYS CHANGE WILL BE DISRUPTIVE BUT PROMISES IT WILL BE WORTH IT

By CBR Staff Writer

Unisys Corp must be wondering if it will ever come right as it announces third quarter losses and says its plan to split into three separate business units will have a disruptive effect on 1995 financial results. It hopes that this time the reorganisation really will put the company in a position to achieve visible operational and financial progress in 1996. It reiterated that the plan will reduce annual costs by at least $400m by the end of 1996. The company blamed the third quarter loss on weakness in its European and US operations and repeated that the size of the charge and impact on jobs have not been determined; it shed 4,000 jobs last year. The loss for the most recent quarter was $32.2m or 36 cents a share, compared with profits of $42.9m or eight cents a share, including $12.1m from the discontinued defence business it sold in May 1995. Turnover is still slipping and was down another 1.3% at $1,460m. Under the reorganisation plan, the company will form an information services, a computer systems, and a global support services – each with its own sales and marketing force to pursue growth in their own markets.Planning for this realignment is on schedule, with implementation set to begin in January, the company said. Unisys did say that orders for its products grew in most major geographic areas, with double digit gains for departmental servers and desktop systems, information services, and desktop services. Strong growth in information services and personal computer systems was offset by a decline in mainframes. Total operating expenses fell in the quarter but the level was still not satisfactory. The shares shed a quarter to $7 even.

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