Mellon Bank has more computer equipment from Wang Laboratories Inc. than most banks. As a result, it is keeping a close eye on the fate of the Lowell, Mass.-based company, which filed for protection under the bankcruptcy laws this week.
Wang's bankcruptcy may be inconvenient for Mellon, but it does not come as a major blow. It and other major banks had invested millions in Wang equipment for office automation and imaging but had begun to phase it out during the company's protracted financial problems.
Bypassed by Technology
Wang has been in a precipitous for more than four years; its losses for that period exceed $1.66 billion. Its line of minicomputers, the core of the business, has been supplanted in most companies by newer technologies such as networks of personal computers.
A huge debt burden forced the company to file for bankruptcy under Chapter 11 late Monday, seeking protection from creditors while restructuring.
Mellon Bank, which had a large installation of Wang minicomputers for office automation and has worked closely with Wang on projects to install imaging technology, began replacing the office automation system -- consisting of Wang's VS line of minicomputers and terminals with networks of personal computers earlier this year. Mellon is retaining the minicomputers for the time being.
Marty J. Lippert, a vice president at Mellon who heads the bank's planning technology and internal controls unit, said Wang's financials were a factor in making the decision to dump many of the company's systems.
Little Concern Voiced
"We have had strategies in place, and were aware the problems were coming for some time," Mr. Lippert said. "We don't anticipate Wang's filing to have any real implications on what we're doing here."
One consultant said, "You'd worry if you were moving forward with Wang, but my sense is that very few banks are moving forward with Wang today."
Last year, Wang changed its strategy, announcing it would focus on software and services, and was getting out of the hardware business. The company formed an alliance with International Business Machines Corp. last fall to resell IBM's minicomputers and workstations. The IBM minicomputers compete directly with the VS line.
A Desire for Expansion
Besides the minicomputers, Mellon has bought Wang imaging equipment, an area where Wang was once considered to be a leader.
"If Wang had any strength, it was in their image product; they lost focus on office automation products, and the PC local-area network just passed them by," Mr. Lippert said.
Mellon has Wang imaging systems in its loan servicing area, storing loan agreements and memos, and would like to expands its use to legal and other documents. Mr. Lippert said any expansion would be 15 months off.
Mr. Lippert said the bank would consider Wang when looking to expand, but not exclusively. Mellon also has several imaging installation using systems from FileNet. "During that time, we'll be assessing what [Wang's] position is and where they're moving," he said.
If Wang emerges from bankcruptcy, it is not clear which product lines will remain. Mr. Lippert said he believes that the imaging products will be retained. He said that even if Wang does not recover, he believes another firm will buy the imaging business.
If the company does not survive, bankers will be stuck with at least some equipment that may be difficult to service and that cannot be upgraded.
Wang's bankruptcy effects its bankers, which include Rabobank of the Netherlands and a unit of Chemical Banking Corp., a trustee for several bond issues.
If Wang survives, and the imaging technology is retained, it is not clear whether the vendor can invest the money to keep its technology ahead of the rest of the industry's. The vendor would also have to migrate the software away from its VS line of minicomputers to other, more popular hardware.
"It's not clear they can drive [the imaging technology] off anything other than a VS," Mr. Lippert said.
However, he said, "With the strength of the imaging product, someone will pick it up Wang doesn't come out of it."