Olivetti Moves In

At the end of four years of heavy losses, Underwood Corp., once the leader of the U.S. typewriter industry, needed help in a hurry. It came last fall from Italy's progress-minded Olivetti company, biggest European maker of typewriters and calculating machines; it purchased 34% of Underwood's stock for $8,700,000. When Underwood's President Frank Beane made the deal, he expected to keep running the company. But the late Adriano Olivetti and his successor Giuseppe Pero (TIME, March 21) had different ideas of the way to cure Underwood's troubles. Out went Beane and most of Underwood's aging top management. They were replaced by a crack Olivetti team headed by ebullient Ugo Galassi, 47, who had organized a U.S. sales subsidiary for Olivetti.

Last week Olivetti further tightened its control of Underwood. The Olivetti-dominated Underwood board unanimously approved a plan for Underwood to trade more than $30 million worth of its common stock (1,200,000 shares) in exchange for Olivetti's U.S. subsidiary, Olivetti Corp. of America (1959 sales: $15 million). If stockholders approve, Olivetti will have 69% control of Underwood stock, and the number of Underwood shares outstanding will be doubled.

Olivetti plans to market its portable typewriters under a joint Underwood-Olivetti label, along with its printing calculators, adding machines and other Italian-made office equipment. Underwood products to be retained with their own labels will be standard and electric typewriters and an electric adding machine.

To make Olivetti's U.S. investment pay off, President Galassi has completely reorganized Underwood. He cut $1,000,000 from Underwood's engineering program for money-losing computers, halted production of bookkeeping machines and portable typewriters, which were not competitive, and stopped bidding for low-profit defense contracts.

Galassi expects that it will be at least a year before his changes are reflected in earnings. The company's sales this year are expected to be below last year's $76 million, and the company will not start to break even until some time in the last quarter. For the first three months this year Underwood lost an estimated $2,500,000. But if Galassi succeeds, the reward will be great. Underwood has a tax-loss carry-forward of at least $25 million that can be applied against earnings.

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