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Unisys warns on 2nd half
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July 16, 2001: 5:05 p.m. ET
IT systems maker's 2Q halved from year ago, warns on second half, cites economy
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NEW YORK (CNNfn) - Unisys Corp. reported sharply lower second quarter results Monday that were in line with Wall Street expectations as customers continued to cut back on tech spending in the period.
The developer of the world's first commercial computer, UNIVAC I, also warned that third- and fourth-quarter earnings would fall significantly short of Wall street forecasts as a result of continued sluggish demand, particularly in international orders.
Blue Bell, Pa.-based Unisys said it now anticipates third-quarter earnings between 5 cents and 10 cents a share. Analysts on average expected 18 cents a share, according to earnings tracker First Call.
Fourth-quarter earnings are expected to fall between 25 cents and 30 cents a share, short of the Wall Street consensus forecast of 40 cents a share
For the quarter ended June 30, the computer-based information systems maker posted earnings excluding a one-time charge of $29.3 million, or 9 cents a share, half the $59.4 million or 19 cents a share it earned a year ago. Analysts on average anticipated 9 cents a share, according to First Call.
Including an after-tax charge of $17.2 million related to a previously announced cash tender offer for bonds due in 2004, Unisys reported net income of $12.4 million, or 4 cents a share in the quarter.
Second-quarter revenue increased 3 percent to $1.5 billion from $1.4 billion.
"As customers delayed planned IT projects and reduced expenses during this period, we saw weak demand in our high-end enterprise server and systems integration businesses," CEO Lawrence A. Weinbach said.
Weinbach said the company saw continued sales growth in network services and outsourcing, but that was offset by weakness in international business due to the sluggish economy.
The company also slashed costs by 12 percent in the quarter, reflecting controls over discretionary spending and "improved cost efficiencies." Unisys also refinanced some high-coupon debt at a much lower rate, helping to further reduce expenses.
Unisys said its margins were hurt by weak demand for its ClearPath enterprise servers and for systems integration and solutions.
Services business revenue increased 7 percent in the quarter, driven by substantial growth in network services and growth in outsourcing.
Revenue in the company's technology business declined 8 percent from year-ago levels reflecting lower shipments of ClearPath Systems.
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Unisys also said it used $14 million in cash from operations in the second quarter compared with $67 million a year ago, reflecting improvements in working capital. The company ended the quarter with $245 million in cash on hand.
Shares of Unisys (UIS: Research, Estimates) ended Monday down 58 cents at $13.15. They were trading 47 cents lower at $12.68 after hours. 
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Unisys
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