Unisys Appoints New CEO and Chairman

Unisys, the struggling computer services and hardware firm, which recently pushed out its CEO (see blog) after increasing pressure from activist shareholder MMI Investments, today announced the selection of J. Edward Coleman as the firm's CEO and new Chairman.  Coleman, who Unisys has slated as a turnaround specialist, will take his position immediately. He has indicated he will be available at the firm's earnings call October 30th at which time he is expected to give his views on the firm.  

Unisys has sung the praises of Coleman for his efforts to turnaround Gateway Computer which he took over as CEO back in 2006.  Coleman was supposedly repsonsible for the sale of the firm to Acer, Inc. Upon the sale he left the firm.  Prior to his work with Gateway, he worked for Compu Com, Computer Sciences Corporation and IBM.  According to today's Wall Street Journal which quoted Unisys' press release,

... he "successfully restructured the company (Gateway) through a series of strategic initiatives and tightly focused the business on its core markets, culminating in its acquisition by Acer Inc.," 

I am not certain MMI Investments which holds over 9% of the company shares will be satisfied with the Coleman pick, we will just have to wait and see.  Coleman's task ahead is monumental, we will just have to watch his moves, his talent picks and his overall strategy to get a real sense of what he plans to do and whether he can succeed in his plans.

For more:

Orange County Business Journal

Washington Technology

Activist Shareholders Force Out Unisys CEO

Yesterday the board of directors of Unisys UIS (NYSE), the computer services firm, announced that Joseph W. McGrath, the company's president and CEO, had agreed to step down by year's end.  McGrath had been in his position for three years.  Unisys and particularly McGrath have been under intense pressure from shareholders to make major changes at the firm.  The company has been languishing for sometime now and has seen a decline in revenue over the last few years.  Special pressure has been applied by MMI Investments LLP, an activist shareholder who owns over 9% of the firm.  Back in January of 2008, MMI wrote an angry letter to Unisys management.  A portion of the letter stated,

...we are mystified by management and the board’s inaction in the face of Unisys’ ruinous stock price performance over the past year. We believe Wall Street’s utter rejection of Unisys stock is indicative that the restructuring benefits are not enough to correct Unisys’ dramatic undervaluation. We believe that Unisys has serious flaws in its strategic configuration, which impair stockholder value due to the taint of the secularly declining Technology business and obscure market recognition of the highly-valuable U.S. Government business. Therefore we believe it is crucial that Unisys move immediately to announce the engagement of an independent, qualified investment bank to perform a review of all available strategic alternatives, with a particular focus on the potential realization of the U.S. Government business through a sale, tax-free spin-off or subsidiary IPO. This assignment should include undertaking the prompt execution of whichever transaction or transactions will lead to maximizing stockholder value.

Management at Unisys initially resisted MMI's efforts but in May after growing pressure from shareholders and a declining stock value the company was forced to relent a bit.  Unisys gave MMI's president , Clay Lifflander, a board seat and as requested by MMI's January letter the company retained Goldman Sachs to help recommend strategic options for the firm.  

The steps taken in May ultimately were not sufficient to make the changes in the company as requested by MMI and other shareholders.  MMI has continued to place pressure on Unisys to to spin out its government outsourcing division as a new company.  The activists finally got McGrath's head.  The change at the top is a positive for the firm but we will have to see who they end up hiring and what he/she intend to do with the firm.

For more:

Unisys Press Release

Philadelphia Inquirer

CNET Asia

PC World

Information-Age

Valley Wag

Philadelphia Business Journal

Wall Street 24/7