Computer networking company

Unisys

(UIS) - Get Report

said Thursday that its first-quarter net income dropped due to a slower-than-expected rebound in sales after Y2K, in line with an earnings

warning the company had issued on April 4.

Unisys posted first-quarter net income of $106.5 million, or 34 cents a diluted share, vs. $109.9 million, or 31 cents a diluted share, in the first quarter of 1999. The results matched estimates from

First Call/Thomson Financial

.

Unisys said the first quarter got off to a slow start due to organizational changes within the company and a slower-than-expected rebound in sales in the early part of the quarter after many firms delayed computer-related purchases due to fear that a Y2K glitch might cause problems.

The Blue Bell, Pa.-based company said it experienced a pickup in sales late in the quarter, which helped stem the decline in revenues.

Revenue for the quarter declined 8%, to $1.67 billion from $1.82 billion in first-quarter 1999.

The company reiterated its expectation that revenues will continue to slump in the second quarter, but improve in the second half of the year.

"As we focus on execution and benefit from improved sales productivity, we look for sequentially improving results through 2000, with revenue down in the second quarter and building to double-digit revenue growth in the second half of the year," said Lawrence A. Weinbach, chairman and chief executive officer of the firm.

During the second quarter, the company is expected to reduce its debt to less than $600 million by retiring old high-interest notes. The company will take an extraordinary charge of about $20 million to complete that process.

Unisys closed Thursday down 1 1/8, or 4.8%, at 22 1/2.