Revenue Declines at Unisys - Analyst Blog


Unisys Corporation ( UIS ) reported revenues of $985 million in the fourth quarter, down 6% year over year. Foreign currency fluctuations did not have much of an impact on revenue in the quarter.

About half of the decline was due to lower revenue in the company's U.S. Federal business and the remainder was primarily due to lower third-party equipment sales in the rest of the business.

Revenue from the U.S. Federal business declined approximately 18% in the quarter due to the termination of the company's contract with the U.S. Transportation Security Administration in November 2010 as well as continued budget challenges in the U.S. Federal market.

Services revenues declined 3% year over year due to lower revenue in the company's U.S. Federal business. Excluding the U.S. Federal business, services revenue grew 2% from the year-ago quarter, driven by continued growth in IT outsourcing and systems integration revenue.

Technology revenue declined 19% in the quarter driven by lower sales of third-party equipment. Sales of ClearPath software and servers were essentially flat year-over-year.

Gross margin came in at 28.4%, down from 29.8 percent in the year-ago quarter. Operating margin came in at 12.3% compared to 12.9% in the year-ago quarter.

Services orders showed double-digit growth in the quarter, reflecting substantial order gains for long-term IT outsourcing contracts as well as order gains for systems integration projects. As of December 31, 2011, services backlog was $5.5 billion, down 4% from a year ago.

Net income came in at $94.3 million or $1.94 per share compared to a net income of $78.6 million or $1.63 per share in the third quarter and a net income of $95.2 million or $2.20 in the year-ago quarter. The results beat the Zacks Consensus Estimate of $1.50.

Unisys generated $159 million of cash from operations in the fourth quarter of 2011, down from $187 million in the year-ago quarter. Capital expenditures in the fourth quarter of 2011 declined to $33 million compared with $41 million in the year-ago quarter.

The company ended the quarter with cash and equivalents of $714.9 million, down from $667.3 million at the end of the previous quarter. Unisys ended the quarter with a long-term debt of $359.7 million, down from $444.4 million at the end of the previous quarter. For 2011, Unisys reduced its debt by 56% or $464 million.

As part of its debt reduction program, Unisys is calling for redemption its 14.25% senior secured notes due September 2015 and a portion of its 12.5% senior notes due January 2016.

We continue to have a Zacks #4 Rank on the stock which translates into a short-term rating of Sell.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: UIS

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