The Power Of Nothing

It was announced last Thursday that Unisys Corporation posted its first profit in two years.

Funny, but I thought it had been longer than that.

And you’ll simply never guess how they managed to achieve this momentous feat.

Did they do it through superior performance in the computer services industry? Did they do it through “utilizing value-added core efficiencies” and “implementing new paradigms to streamline operations,” or even “putting people in their silos to encourage bottom-up ownership of knowledge-based learning”?

(Yes, I once wrote for corporate marketing – have pity on me.)

Why no, of course not. They did it by offshoring as many jobs as they could to India (as noted in the Inquirer story).

And by the way, this is perfectly typical for how Unisys operates, and too many companies, I’ll admit; I don’t post on the economy as I once did partly because the truly awful behavior I and others once highlighted is now commonplace, and I can’t keep up with all of it.

Unisys, however, is particularly infamous for this and other reasons. It was the product of a merger that should have never taken place between Burroughs Corporation and Sperry (though it did produce the utterly brainless slogan “The Power Of Two,” as referenced in the title of this post).

The cultures of these two merging firms couldn't have been more different, and the merger has never really proven to be successful; employment dropped from 130,000 to about 30,000. Meanwhile, Michael Blumenthal (pictured), the Burroughs chairman who engineered the merger, left the company with a $2 million settlement and a pension of $500,000 a year, moving to France with his trophy wife (I got some of this from a message board, by the way).

Unisys has had a particularly difficult time retooling itself as a company, trying to become a player in the computer services and support industry as mainframes have been replaced by smaller networks, and the company has been trying to promote open systems development as well.

So what was left in Blumenthal’s wake?

Well, when it came to quarterly revenue, loss after loss after loss after loss (this notes the first quarter loss in ’05, this notes the second quarter loss in '05, and the follwing describes the fourth-quarter loss in ’05, because of…)

…a reversal of a projection only a month ago that it would be in the black on increased sales. The weaker-than-expected results stemmed from writeoffs related to a problematic contract as well as to changes in how it will account for a new contract. Unisys had earlier expected a profit of as much as 31 cents a share but it's now looking at a loss of between 7 and 10 cents a share. Revenue for the quarter declined 7%--to $1.5 billion. Unisys is gradually converting itself from a manufacturer of mainframe computers to a provider of computer services.

This describes the controversy that ensued when Unisys tried to force software developers to pay a royalty for use of the Graphical Interchange Format (GIF). Even though CompuServe created the format for free use, Unisys wanted a fee because the GIF files were used in certain categories of software created and supported by Unisys.

This complaint filed by the state of South Carolina against Unisys alleges fraud and unfair and deceptive acts in violation of that state’s Unfair Trade Practices Act. This describes a Florida company called Armtec which apparently existed as a conduit for illegal payments from Unisys employees to federal officials involved in arms procurement. And this describes a whistle-blower lawsuit filed by a former Unisys employee in Minnesota who alleged that the company told him to lie to the Navy about the cost and technical challenges involved with replacing proprietary Unisys computers with commercial systems.

The real capper, though, is described in this Raw Story account of overbilling by about 117,000 hours on the part of Unisys for a Transportation Security Administration contract.

And the lobbyists who helped secure the contract for Unisys? A team from the Greenberg Traurig law firm led by Neil Volz, former chief of staff to Rep. Bob Ney (R-OH) -- which included convicted lobbyist Jack Abramoff, reported by The Raw Story, which also notes…

…that Unisys acquired the contract, said riddled with fraud, in a process that included backroom dealings and almost no competitive bidding, and former Abramoff associates say his lobbyists had a hand in the deal. The investigation also found that the man who brokered the TSA deal, a company president, was later a buyer of Abramoff’s posh Washington restaurant.

To be fair, I’m sure that the company has had some success stories over the years. And the Wikipedia article notes that it has a 100 percent rating from the Human Rights Campaign for its policies regarding lesbian, gay, bisexual and transgendered employees.

But believe me, there’s an awful lot of anecdotal stuff that I could have discussed about this company that I decided not to get into because I couldn’t officially corroborate it, and also because I know people would be hurt (I'll give you a hint, though; it has to do with people getting 30-year service awards and then booted out the door the next day).

So don’t be surprised if, one day, you find out that Unisys, a product of a merger meant to increase a stock price for a quick killing by a robber baron CEO (and it was rare back in 1986, but mergers and acquisitions is a growth industry these days) at the expense of two legitimate but divergent technology companies is itself bought out and gutted for that very reason, disappearing into history as has the two companies it once consumed.

And when that day mercifully comes, I will say good riddance.

Update 2/3: The beat goes on (registration required)...