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Unisys Narrows Loss

Quarterly sales edge higher.


(UIS) - Get Unisys Corporation Report

said Wednesday that it narrowed its loss for the third quarter and announced more job cuts to further improve its bottom line.

Shares of the IT services firm shed 15 cents to $6.52 in recent trading.

Unisys recorded a loss of $77.5 million, or 23 cents a share vs. a loss of $1.63 billion, or $4.78 a share a year ago.

The latest results included a pretax charge of $36.4 million for additional job cuts, mainly in Europe, and $43.4 million in pretax pension expenses. In the year-ago quarter, Unisys took a $1.57 billion charge for increasing its deferred tax asset valuation allowance and $44.2 million in pretax pension expenses.

Sales totaled $1.41 billion, inching up from $1.39 billion a year earlier.

Analysts polled by Thomson First Call forecast a loss of 6 cents a share on sales of $1.42 billion. The consensus EPS estimate appeared to exclude the extra charges.

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Goldman Sachs analyst Julio Quinteros omitted the pre-tax restructuring charges and estimated the company had an EPS loss of 5 cents, worse than the break-even estimate he had expected.

"We view the results as a mixed bag," Quinteros wrote. He noted that the company's turnaround efforts seem to be working, but the progress is hampered by continued year-over-year declines in technology orders, plus weak margins and cash-flow trends. He has a neutral rating on the stock.

His firm has a banking relationship with Unisys.

Unisys said it will cut another 100 jobs in addition to the 5,500 positions it has already targeted. During the quarter, the company eliminated 1,400 jobs, bringing the total so far to 3,600.

Unisys will slash another 1,400 positions in the fourth quarter, and the remaining 600 employees will be eliminated in the first half of 2007.

Cost savings will total $280 million by the end of the year, and more than $340 million by the second half of 2007, Unisys said.

"We made solid progress in the third quarter in repositioning Unisys for profitability," Joseph McGrath, Unisys president and chief executive officer, said in a statement. "Our services orders showed double-digit growth in the quarter as clients respond favorably to our more focused portfolio of services and solutions. Unisys is increasingly being chosen for leading-edge projects in security, outsourcing, and open source solutions."

Unisys did not immediately provide guidance for the fourth quarter. The consensus estimate expects the company to earn 6 cents a share on revenue of $1.58 billion.