New Leader Sought as Activist Investor Points to 'Missteps'Unisys Corp., which is under attack by an activist investment firm, said Chief Executive Officer Joseph McGrath will step down by the end of the year as the company looks for a new leader.
The computer-services and hardware company said Mr. McGrath agreed with its board that "a change in leadership would best enable Unisys to move forward." The company said Mr. McGrath, 57 years old, wasn't available for comment.
MMI Investments LP, a New York investment firm that holds about 9.1% of Unisys stock, has been criticizing the company since last year for "the seemingly continuous stream of management, operational and financial missteps that have characterized recent performance." Earlier this year two MMI representatives were added to Unisys's board. The investment firm declined to comment on Mr. McGrath's planned departure.
Earlier this year, Unisys retained Goldman Sachs & Co. to investigate alternatives for maximizing shareholder value. Mr. McGrath said in July that he expected results of the investigation to be announced by the end of this year.
Unisys, based in Blue Bell, Pa. -- whose predecessor companies, Sperry Univac and Burroughs, hark back to the early era of computing -- performed well during the 1990s but failed to recover as other technology firms did after the dot-com bust earlier this decade. The company has faced declining sales for its proprietary computer systems as customers moved to standardized platforms.
Building on its existing computer-repair and consulting business, Unisys moved into the computer-services field with mixed results. Some of the biggest contracts it won, such as a check-processing deal in the U.K., turned into money losers that hurt results for years.
Mr. McGrath, a Xerox Corp. veteran who joined Unisys in 1999 and ran parts of its services organization, became chief executive in 2005, succeeding Lawrence Weinbach, the architect of the services strategy.
Unisys has had weak results since, with only three quarters of profitability amidst large restructuring charges and erosion in revenue. In 2007 it reported a loss of $79.1 million, including $66 million in restructuring charges, on revenue of $5.65 billion. Its first-half losses this year totaled $37.4 million.
By: William Bulkeley
Wall Street Journal; September 24, 2008
