Computer services supplier Unisys Corp. (NYSE: UIS) reported Thursday that first quarter net income was in line with recently lowered expectations. Slow sales in the financial services and government sectors and an internal reorganization dinged sales.
Shares closed at 23 5/8 Wednesday, having fallen since April 4, when the company warned that first and second quarter sales would be below expectations. Unisys blamed its troubles on a slow start in the quarter because of a Year 2000 hangover. The company also reorganized its sales staff.
The company said first-quarter net income was $106.5 million, or 34 cents a share, compared to $109.9 million, or 31 cents a share, brought in during the first quarter of 1999. The results are right on target with the 34 cents a share predicted by First Call's consensus estimate.
First quarter revenue fell to $1.67 billion from $1.82 billion a year ago.
Unisys Chairman and Chief Executive Larry Weinbach said in a statement that the company's revenues would recover to recent double-digit growth rates during the second half of this year. "We look for sequentially improving results through 2000, with revenue down slightly in the second quarter and building to double-digit revenue growth in the second half of the year," he said.
Weinbach also said that effective April 15 the company will take the next major step in debt reduction by retiring, through a combination of cash and short-term borrowings, the remaining $399.5 million of its 12 percent notes. This action will bring its long-term debt down to less than $600 million and further reduce annual interest expense.
As previously announced, Unisys will take an after-tax extraordinary charge of about $20 million, or 6 cents a share, in the second quarter related to this early retirement of debt.
Unisys competes with Hewlett-Packard (NYSE: HWP), IBM (NYSE: IBM) and Compaq (NYSE: CPQ).
Reuters contributed to this report.