Unisys retreats from building own boxes

OEM Unisys claims it is finally heading for a profitable year.

The race was on last week to gain the outsourcing rights to produce Unisys' machines after the manufacturer revealed that it was pulling out of the market, except for high-end servers.

According to US reports, Compaq and Gateway 2000 were the two companies tipped to fight over the manufacturing contract. Unisys refused to comment on which company would win the rights to OEM its machines but admitted that it was in discussions with a 'major global technology partner'.

The PC company, whether it be Gateway 2000, Compaq or another, will make notebooks, low-end servers and desktops with the Unisys brand. A decision is expected within the next 60 to 90 days.

Unisys was unable to say whether or not lay-offs would occur at the company's two factories in San Jose and France. 'It's premature to speculate on what the impact will be in terms of lay-offs,' said a representative from Unisys. The manufacturer will continue supplying notebook PCs and low-end servers in between the transition period.

But Unisys will continue to manufacture many of its high-end servers at its southern California plant, and said it also will continue to use a Gateway-ALR server it rebrands.

Neither Gateway 2000 nor Compaq would say if either was the favoured company, with company representatives issuing no statements. Last year, speculation was rife that Compaq was looking to acquire Unisys service arms, a claim that was hotly disputed by then senior executives at the company.

Meanwhile, Unisys claimed it was clawing its way back to profitability.

It stated that the yearly results, due in a few weeks, would show its net income would be three times that in 1996. 'We are making significant progress in our objective of becoming profitable,' a representative claimed.

Unisys admitted that it would be forced to take a charge of about $1.1 billion against its fourth quarter figures of 1997 net income related to its withdrawal from manufacturing.

The withdrawal was the result of an initiative of Unisys chairman and chief executive officer Lawrence Weinbach who joined the company in September of last year.