Unisys Corporation recently reported third-quarter 2011 net income from continuing operations of $78.6 million, compared with third-quarter 2010 net income from continuing operations of $21.8 million. Revenue in the third quarter of 2011 grew 6% to $1.02 billion compared with $961 million in the year-ago quarter. Foreign currency fluctuations had a positive impact on revenue in the quarter of almost 6 percentage points, the company said.
"This was a strong quarter for Unisys," said Unisys chairman and CEO Ed Coleman during a Unisys webcast announcing the quarter results. "We grew our revenue and tripled EPS from continuing operations as we benefited from the foundational work we've been doing to strengthening our competitive and financial profile." Coleman observed that the Unisys revenue growth of 6% was achieved despite lower revenue in the company's U.S. Federal business, where it continues to be impacted by the ending of the TSA contract last November and budget uncertainties in that market. "Excluding the U.S. Federal business, our overall revenue grew 14%. Services revenue grew 2%, 12% excluding U.S. Federal business. Within services, we grew revenue in both of our strategic growth areas of IT outsourcing and systems integration. Excluding U.S. Federal, IT outsourcing revenue grew 12%, marking the seventh consecutive quarter of growth in this business. And excluding U.S. Federal, systems integration revenue grew 21%, reflecting higher sales of industry solutions," he said.
In technology, Coleman said, Unisys grew revenue 36%, driven by significantly higher ClearPath sales. ClearPath sales can vary significantly from quarter-to-quarter, said Coleman and for that reason the company believes that it is best way to measure that business on a full-year basis. "With a strong third quarter, year-to-date ClearPath revenue is approximately flat, and we continue to focus on our goal of maintaining 2011 ClearPath revenue roughly flat with 2010 levels. Along with continued focus on cost discipline, we were able to leverage the revenue growth in the quarter into higher margins and profitability. We reported an operating profit of $113 million, up 48%, and achieved an overall operating margin of 11.1%. In our services business, we achieved an operating profit margin of 8.7%, which was within our targeted 8% to 10% range."
Coleman said Unisys continues to enhance its ClearPath software and server family, which, "we believe, is the most secure and reliable, open enterprise server on the market today." Coleman noted that over the past few years, Unisys has made significant investments in the ClearPath environment to refresh the product line and introduce new features such as secure partitioning, specialty engines and support for mobile computing while also transitioning from proprietary to industry-standard hardware. "We've done this while strengthening the six key attributes that make ClearPath special: its superior reliability and resiliency, its recognized security, its advanced automation, its support for mobile computing, its agility and flexibility, and its scalability. These are the attributes that make our ClearPath client base so loyal. They're also attributes that we believe would be of interest to any organization looking for high-volume, transaction-intensive, secure computing." Coleman said that Unisys continues to explore opportunities to extend the market for ClearPath software and servers such as offering ClearPath capabilities through new delivery models, such as the cloud, as it is already doing with its ClearPath-based air cargo management business.
As far as growth trends, the continued shift to cloud is in fact the single most disruptive trend Unisys sees in the market, said Coleman, noting however that concerns remain, particularly around the security and reliability of cloud environments. "Clients are looking for the same attributes in cloud environments that they've come to expect from their mission-critical systems, which is why we feel that Unisys, with our core expertise and mission-critical computing, is well suited to help clients move to the cloud. Our offerings in this market include cloud-managed services, cloud professional services, cloud infrastructure software and applications delivered via software-as-a-service model."
As a result, while the economy is challenging, said Coleman, "we like how our portfolio is positioned relative to the trends they are playing out in the market. We're focused on continuing to sharpen our differentiation and making continued progress on our 3-year financial goals."
Additional details on Unisys' third quarter 2011 results can be found at www.unisys.com/unisys/news/detail.jsp?id=1120000970018410153.