Merrill Lynch recently conducted a poll of the companies it covers and found that the majority are comfortable with their compliance plans for the Year 2000 problem. Merrill said that as it had found in its surveys of buyers, vendors similarly showed virtually all of its companies expressing confidence that they will be in compliance […]
Merrill Lynch recently conducted a poll of the companies it covers and found that the majority are comfortable with their compliance plans for the Year 2000 problem. Merrill said that as it had found in its surveys of buyers, vendors similarly showed virtually all of its companies expressing confidence that they will be in compliance by the turn of the century. On average, server vendors plan on being Year 2000 compliant by the end of 1998, with integration testing for suppliers and customers slated for 1999. That’s the area that causes the most concern for the bank, however, as most companies polled had mixed expectations regarding the level of compliance from their suppliers and customers. With regard to costs, most companies claimed negligible impact on earnings from Y2K expenditures. For those that did disclose projected costs, the amount ranged from less than $1m for Lexmark International Group Inc, to a high of $144m for Xerox Corp. Some of the figures may not be comparable, however, since companies have some discretion over which costs to associate with Y2K. Among the major companies Merrill deals with, Data General Corp stressed that it was Y2K-ready, versus Y2K- compliant and suggested that it expects residual issues after January 1, 2000. EMC Corp said its Y2K costs are expected to total $7.5m. IBM Corp said it doesn’t expect the costs associated with Y2K compliance to be material and promised more information on its status for converting systems on July 31. Network Appliance Inc estimated it will be compliant by October 5th, the earliest date reported to Merrill, which is mostly attributed to the smaller size of the company and the relative youth of its systems. NCR Corp said its plans call for conversion of all critical sites and processes by September 1999, with non-critical sites and processes being addressed on a case-by-case basis. The company expects to spend $100m over three years. Sequent Computer Corp expects less than 90% of its systems to be compliant by January 1, 2000. Sun Microsystems Inc, taking a conservative stance, told Merrill that it doesn’t expect its suppliers or customers to be compliant in time. Unisys Corp reckons its cost of compliance and testing for this year and next is $4m, with another $1m estimated for cleanup in 2000. Mission critical applications are scheduled for compliance by January 31, 1999, with other applications scheduled for compliance by September 1999. Xerox estimates that its Y2K costs were $28m in 1997 and will be $85m and $31m in 1998 and 1999, respectively – the highest total outlay among companies responding to Merrill’s investigation.