Unisys Announces Second Quarter Results; Turnaround Program Showing Progress

Unisys Corporation reported second-quarter 2009 net income of $38.1 million, or 10 cents a share, compared with a net loss of $14.0 million, or 4 cents a share, in the second quarter of 2008. The company's revenue declined 16% to $1.13 billion compared with revenue of $1.34 billion in the year-ago quarter. Foreign exchange rates had an approximately 8 percentage-point negative impact on revenue in the quarter. On a constant currency basis, revenue declined 8% in the quarter.

Referencing Unisys' turnaround program to enhance profitability, strengthen its balance sheet and improve its competitive position during a conference call announcing the second quarter results, Ed Coleman, chairman and CEO of Unisys, said, "We saw some encouraging signs in the second quarter that our efforts are working and beginning to show results."

Commenting on the second quarter revenue, Coleman noted, "We saw continued soft demand in our commercial business as organizations remain cautious about investing in new IT projects, as they work through the economic downturn. However, our U.S. federal government business continues to grow as we benefit from government spending on security and other key areas of focus for us."

Coleman also said that over the past six months Unisys has taken major strides forward in terms of sharpening its business focus and market differentiation. "We've matched up our strengths against the marketplace in growing areas of client needs and we're focused on four areas of the market, where we're investing our resources to drive profitable revenue." The four areas are security, data center transformation and outsourcing, end-user outsourcing and support services, and application modernization and outsourcing.

According to Coleman the cloud computing market is a "natural one" for Unisys to play in. "Organizations increasingly recognize the advantages of migrating IT workloads to the cloud, but they face significant obstacles that are holding them back from widespread adoption."

Citing concerns about security as one of the biggest obstacles standing in the way of customers' embrace of cloud computing, Coleman said Unisys' security capabilities differentiate it from others in the market, including its "ground-breaking network security technology" called Stealth. Combined with the company's other capabilities such as a deep understanding of the data center, and experience in managing mission-critical applications, Coleman stated, Unisys "can provide the added levels of security and reliability that clients need to move safely and securely into an online cloud."

Revenue in the United States declined 5% to $542 million, as growth in the company's U.S. federal government business was offset by declines in its commercial business. Revenue in international markets declined 24% to $587 million. On a constant currency basis, international revenue declined 10% in the quarter.

Unisys reported an overall gross profit margin of 23.9%, up from 22.7% in the year-ago quarter. The company's overall operating profit margin increased to 6.7% compared with 1.7% a year ago, reflecting reductions in selling, general and administrative expenses. Additional details are available at the Unisys website.