Unisys' Profit Plummets on Weak Orders

Unisys

(UIS) - Get Report

said earnings fell 47% in the first quarter as customers continued to delay technology spending.

The computer services firm earned $32.7 million, or 10 cents a share, below earnings of $69.3 million, or 22 cents a share last year, but above the 8-cent consensus estimate.

"Clearly, we continue to operate in a difficult business environment that is impacting our order levels, due to lengthened sales cycles and delayed decision-making on the part of clients," said Unisys chief executive officer, Lawrence Weinbach, in a statement.

Unisys expects earnings of 12 to 15 cents a share on revenue of $1.35 to $1.45 billion in the second quarter, in line with analysts' forecasts for earnings of 14 cents a share on revenue of $1.45 billion.

For 2002, Unisys reiterated forecasts for earnings per share growth of 50%, before special items.

"While the timing of an economic recovery for capital expenditures is unclear, we remain focused on improving our profitability by maintaining tight costs controls and by pursuing value-added business oppportunities," Weinbach said.

In the first quarter, revenue fell 16% to $1.36 billion from $1.62 billion last year, which included $80 million in residual sales from de-emphasized low-margin commodity hardware business.

Unisys said its services business had an operating margin of 4.9% in the first quarter, up 2.6% from the previous quarter. The company is working toward a longer-term target of 10% to 12% in that division.

"Key to our bottom-line results is our successful effort to focus our service business on higher-margin opportunities where we can?add value to our clients," Weinbach said.

Overall operating margins fell to 5.8% compared to 6.5% in the year-ago period.

Shares of Unisys closed the regular session down 36 cents, or 3.04%, at $11.47.