The departure of the latest CEO at Unisys brings back memories of perhaps the most disastrous attempt at consolidation in the history of the computer industry, a fiasco that is worth studying for any company that is considering taking advantage of the sharply lower stock prices to make its own attempt at consolidation.

Burroughs and Sperry, the two companies that combined to form Unisys in 1986, were pioneers in computers. The Burroughs B5000, introduced in 1961, was a truly revolutionary machine. Sperry’s Univac line was so successful for a time that “Univac” became a synonym for mainframe computers. Both faced pressure from IBM at the time of the merger but were healthy.

W. Michael Blumenthal, the Burroughs CEO who hatched the plan to acquire Sperry, was a storied figure in American business. As a youngster, his family fled Germany to avoid the Nazis before World War II. The family made it as far as Shanghai, where they and other refugees were quarantined by the Japanese. Somehow, the German teenager got out enough to get the lay of the land in Shanghai and learned Chinese. When the Americans arrived at the end of the war, Blumenthal, who had previously studied English, made himself useful as a translator. His work with the Americans won him and his sister visas to study in the U.S. They arrived almost penniless, but Blumenthal had won a scholarship to study at Berkeley, where he became such a star that he won academic appointments and then played a major, very public role in trade talks in the Kennedy administration. He headed into the business world from there, then returned to government as the Treasury Secretary under President Carter. When he became CEO at Burroughs, Blumenthal was at the top of his game.

But he made an enormous miscalculation when he decided that merging Burroughs and Sperry would give him the scale to compete with IBM. Blumenthal ended up buying more problems than benefits. The transition turned out to be terribly complex. Two years after the merger, Unisys still hadn’t managed to move to a unified order-entry system. Even worse, while Unisys talked about merging the Burroughs and Sperry architectures to produce a single line of minicomputers and mainframes, such a merger is extremely difficult. IBM convinced many customers that they’d undergo less grief if they just made the transition to IBM equipment right away, rather than suffer for years as Unisys fumbled its way toward a single architecture. Even as the fundamentals of the Unisys business eroded, the company had to service the debt that it took on as part of the Sperry acquisition.

Blumenthal soon took early retirement. His successor briefly stabilized the business, then stepped aside–something that has been repeated so many times in the years since then that we’ve lost count. The company that counted on scale to let it take on IBM now has about half the revenue the combined companies had at the time of the Burroughs acquisition of Sperry. The enterprise value of Unisys–by which we mean its market capitalization minus its cash–is about $200 million.