The Mission Viejo site of server maker and technology consulting company Unisys Corp. is at the heart of a turnaround effort at the company.
Unisys’ bread and butter is making big mainframe servers for companies and agencies that need to be “on” all the time. They include regional Federal Reserve banks and airlines.
The Blue Bell, Pa.-based company dates back to the earliest days of computers when it developed its own operating system to run its servers.
Now Unisys is shifting its focus from big and proprietary to small and sleek.
The company’s Mission Viejo unit is developing smaller, powerful servers built around Intel Corp. chips and that run software from Microsoft Corp. or the Linux operating system.
“We have a long history of mainframe computing,” said Richard Marcello, president of the company’s systems and technology group. “We have been able to take all of the years of expertise here and translate it.”
Unisys is playing catch-up. Longtime rivals IBM Corp. and Hewlett-Packard Co., as well as Dell Inc., have come to dominate the market for small, powerful servers.
The company is looking to move customers from mainframes to newer servers, said Bob Eichers, general manager at Unisys’ Mission Viejo site. They’ll still be able to continue using the software they’ve developed for their own businesses, according to Eichers.
“The reason we are migrating is because when you develop future systems based on an industry standard like Intel, your development costs go down,” he said. “As a manufacturer, we don’t have to keep maintaining and repairing huge amounts of proprietary technology.”
About 85% of Unisys’ $6 billion in annual revenue comes from technology services, including consulting, design, installation and maintenance of big computer networks.
The rest, roughly $840 million, is from selling products,the bulk of which are servers.
Customers include banks, airlines, railways, manufacturers and the government.
Newport Beach-based savings and loan operator Downey Financial Corp. and the county of Orange are customers.
Unisys once had a bigger operation in OC, counting as many as 1,300 workers. It ranked as the second largest computer products maker in the county in the mid-1990s.
The technology downturn in 2000 hit the local operation hard, bringing local job cuts.
It now has about 750 local workers.
The company’s still restructuring. It’s been working to get back to profitability after a tough year that was marked by big job cuts.
Excluding charges, Unisys swung to a profit of $44 million in the third quarter, versus a $43 million loss a year earlier. Including charges, the company narrowed its loss to $31 million from $78 million.
Third-quarter sales slipped about 1% to $1.4 billion.
Unisys still is working on a massive cost cutting plan that began in 2005. About $37 million was spent on third-quarter restructuring charges, including severance and retirement payouts.
The company’s shares are down about 25% since July. It counted a recent market value of about $2 billion.
It’s looking toward the end of next year as its break-even date, according to Marcello.
The Mission Viejo site, the main one for Unisys’ server group, keeps a low profile.
It’s seen a lot of changes of late.
Unisys recently combined an office in northern San Diego County’s Rancho Bernardo into Mission Viejo.
The bulk of Mission Viejo workers,about 450,are in engineering, manufacturing and supply chain management. The rest are in administration and sales.
The design work, assembly and testing of servers is done at Mission Viejo, which has about 100,000 square feet of manufacturing space out of a total 300,000.
Most of the servers’ “guts,” including circuit boards, cooling fans and cables, are made abroad.
“We partner with a lot more people in the supply chain than we used to,” said Eichers, who has spent nearly 35 years at Unisys.
The local office got a new boss earlier this year when Marcello, a server industry veteran from Hewlett-Packard, came out of early retirement to help with Unisys’ turnaround.
Marcello is set to head development, production and sales and splits his time among Boston, Mission Viejo and Blue Bell.
The cultures at Unisys and HP are similar, Marcello said.
“It is very honest, very open and very direct. I think from that perspective it’s been easy to transition,” he said. “The real different thing is that I’m running a business that has integrated hardware, software and services.”
Marcello fills a spot left by Leo Daiuto, who retired after 39 years at the company,not an atypical tenure for Unisys workers.
Before Unisys, Marcello, 50, was general manager of HP’s business server product line. He’s also worked at Compaq Computer Corp. and Digital Equipment Corp., both now part of HP.
Marcello has experience in marketing what’s known as “virtualized servers”,tech speak for grouping together servers on a network so they appear as one source of data.
“The world is going to virtualized, automated server environments,” Marcello said. “It gets you more bang for your buck.”
Meanwhile, the company is tightening its belt for another round of cost cutting.
“We are actually trying to figure out where it will come from,” Marcello said. “We know that we are about 90% of the way there.”
