Unisys Corp., the computer company recovering from hard times, has won a significant contract from a Norwest Corp. subsidiary.
Getting a crucial showcase for its revamped strategy and a chance to regain stature as a financial industry vendor, Unisys will spearhead a comprehensive systems upgrading for Norwest Financial Information Services Group.
The multiyear, multimillion-dollar contract-specific terms were not disclosed-could have an impact far beyond Norwest. The upgraded system is to provide the technology infrastructure for Norwest's $9 billion consumer finance subsidiary and, through it, will support the operations of 26 other finance companies.
Unisys, now more of a system integrator than a hardware seller, is to work with Norwest to replace an aging mainframe-based system with a more modern client/server configuration. Norwest expects to beat its competition by having the product, named Sapphire, in place by 2000.
"I knew someone would build the next-generation system, and the first one out will have the competitive advantage," said Dennis Johnston, president of the Norwest unit in Des Moines. "I wanted Norwest to be the first."
Sapphire would support consumer lending, auto financing, and private- label credit operations of its customers, which have 3,000 total branches.
Mr. Johnston characterized the decision to move to a Microsoft Windows- based operating system as "bold," saying, "we will have a more cost- effective, flexible operating environment (preparing clients) for the dramatic changes we anticipate in the consumer finance industry."
Meanwhile, Unisys gets "a chance to demonstrate its competence in an area where, frankly, they have not been a name player," said William Bradway, an analyst at Meridien Research, a technology-tracking firm in Needham, Mass.
Like many observers, Mr. Bradway has high regard for Norwest Corp. and views it as a long-term survivor. Its reputation could reflect favorably on Unisys.
Indicating the importance Unisys attaches to the project, chairman, president, and chief executive officer Lawrence A. Weinbach revealed the Sapphire deal at the Blue Bell, Pa., company's annual meeting Monday. He said it is "testimony to the high-caliber skills of Unisys employees and our commitment to work with customers to deliver innovative results."
"This is an investment for Unisys" as it branches out of hardware and check-processing equipment, said the consultant M. Arthur Gillis of Computer Based Solutions Inc., Dallas. "They are trying to crack a market, and they picked a good one."
He said replacing mainframes would be a challenge for any vendor.
Mr. Gillis and other technology veterans recalled that Norwest undertook a risky technology-overhaul venture before, with unhappy results. It joined with Banc One Corp. and Electronic Data Systems Corp. in a $175 million effort to create a fully integrated banking system. Over the course of the 12-year project, technology advances simply passed it by.
Sapphire is being cast in a far different light, with client/server technology that is inherently adaptable. "What we do not need is another deposit system," Mr. Gillis said. "But lending systems are huge, complex, and very difficult."
"I have no reservation that this project will be successful," said Mr. Johnston of Norwest.
Norwest is the latest in a string of "wins" for Unisys. They included a three-year, $70 million contract with an undisclosed European telephone company and a $12 million sale of the Navigator Windows NT-based branch automation software to Sovereign Bancorp., Wyomissing, Pa.
Unisys' share price has been rising. At midafternoon Wednesday, the stock was at $26.125, up nearly 70 cents from Tuesday's close of $25.4375 and close to double its $13.875 price at the end of 1997.
John B. Jones, an analyst at Salomon Smith Barney, has projected 7.5% revenue growth this year, to $7.1 billion. Unisys, which had 1997 operating income of $199 million but a net loss of $854 million, "is clearly emphasizing services as its growth vehicle," Mr. Jones said.
Unisys wants to generate 75% of its revenue from services by 2000, he said, up from 63% now.