The task facing James Unruh, new chief executive of Unisys Corp, is a daunting one. The company lost $639m last year, another $3.2m in the first quarter, and its current gearing level is an extremely high 45%, more than double the computer industry’s traditional 20% target. That means that Unisys is dependent on high sales merely to service its debt, and it also has serious implications for research and development funding. However, Unruh told Computer Systems News that he expects to see Unisys heading towards profitability within two years, and he plans to cut the current debt burden of $4,000m to a more manageable load of $2,500m. In the coming year, he wants to sell a number of ancillary operations, including Convergent’s carefully-collected series of value-added reseller businesses, and he looks for a reduction in debt by up to $800m. However, Unruh doesn’t foresee an early sale of Unisys’ defence business, and insists that he isn’t relying on that as a means to reduce debt. Unruh believes that operational improvements in cash flow is more important than selling assets, and he expects to see gains in inventory control, more astute use of assets, and fewer receivables. Unisys has already reduced inventories to $1,800m, down by $700m, and Unruh says that the problems of 1988 were partly caused by distribution points building up safety stock. Unlike many in the computer industry, he isn’t overly intimidated by high gearing, and prefers to have debt on his balance sheet than to be heavy with cash – and at this stage in the game he doesn’t have much choice. Unisys’ core businesses of defence, maintenance, and mainframes account for 70% of revenue, and Unruh thinks that they will be sufficient to cut debt and finance research and development. However, as with the majority of mainframe manfacturers, Unruh emphasises the increasing importance of value-added services and systems integration. They require little capital investment, and Unisys believes that it is well positioned to exploit such activities, especially in an open environment. Its problem is that every other company fallen on hard times is looking to systems integration as a panacea and a route to new and profitable growth, and everybody can’t be a winner. And only 20% of Unisys’ business is in the commercial Unix environment, and Unruh acknowledges that the company’s performance in open systems has not been spectacular. He also says that as hardware volumes and revenues are falling, so Unisys has to enter into more alliances with service companies. Unruh is clearly facing up to the state in which he finds the company, but it’s all a very far cry from his predecessor Michael Blumenthal’s promise that Unisys will be doing $20,000m a year within a year or so from now: the further planned sales of assets suggest that it is more likely to shrink further.