Poor Government Sales Hurt Unisys' Profits, Stock

By Steve LeSueur, Editor


JULY 18 ? Unisys Corp.'s second quarter profits declined more than 50 percent, due in part to a poorer-than-expected showing in its federal government business, the Blue Bell, Pa.-based company reported July 18.


Company profits fell to $56.3 million, excluding an extraordinary charge for the repayment of debt, from net income of $118.0 million in the second quarter of 1999. Second quarter revenue declined 16 percent to $1.6 billion from $1.9 billion a year-ago.


Two areas the company said contributed to its problems were financial services and government sales, said Tom Meagher, vice president of equity research with BB&T Capital Markets, a division of Scott & Stringfellow Inc. of Richmond, Va.


"What it came down to with the government was they just didn't close the hardware sales," Meagher said.


Unisys shares took a beating following the report, falling more than 20 percent to $11 per share from $14.12 at the market's July 18 close.


Unisys, which in June warned of slower-than-expected growth, said the third quarter would witness a further slide in revenue and profits.


"Based on the continued slow recovery in our business and the movement of some technology contracts into the fourth quarter, we expect our third-quarter revenue to be down from a year ago and our earnings per share to be below the second quarter 2000 level," said Lawrence Weinbach, Unisys chairman and chief executive officer. "We look for a pickup in revenue in the fourth quarter, particularly in our technology business, with earnings per share relatively flat from year-ago levels."