Unisys Shares Fall on 3Q Revenue Dip

Unisys said third-quarter revenue fell by 1 percent to $1.39 billion, a decline that would have been worse had the weak dollar not boosted the value of foreign business.

The Blue Bell-based company posted a quarterly loss of $31 million, or 9 cents per share, compared with a loss of $77.5 million, or 23 cents, in the same period last year.

Shares of Unisys fell $1.30 to $6.16 in afternoon trading.

"The revenue was weak and the restructuring seems to be slowing," said James Friedman, an analyst at Susquehanna Financial Group in New York.

The company's restructuring strategy includes cutting jobs to reduce costs, selling noncore businesses, revamping its sales strategy and focusing investments on a few higher-growth areas -- outsourcing, open source and Linux products, Microsoft offerings and security.

Unisys expects to consolidate facilities in the fourth quarter and boost its foreign workforce.

In the third quarter, IT services business revenue was flat while hardware revenue fell by 9 percent in the quarter. About 87 percent of Unisys' revenue comes from IT services.

Unisys pushed back its 8 to 10 percent operating margin target, excluding retirement-related expenses, to the second half of 2008 instead of the full year.

Joe McGrath, president and chief executive, said the company is making progress in improving profitability and laying the foundation to increase revenue in 2008.

He pointed to the company's operating profit of $43.6 million in the quarter, a reversal from last year's loss of $42.9 million. Operating income excludes expenses and gains not directly related to operations, such as interest expense. It includes costs such as salaries and overhead.

Third-quarter results were hurt by a more than doubling of taxes to $36.8 million and an increase in other expenses to $19.3 million compared with $400,000 in income last year. But Unisys saved money as retirement expenses were cut in half to $22.8 million.

Last year's third-quarter loss was inflated by $36.4 million in pretax restructuring charges.

Geographically, business from U.S. customers fell by 5 percent in the quarter to $608 million while those from international markets rose by 2 percent to $785 million. But taking out the positive impact of a weak dollar, international revenue actually fell by 4 percent.