Unisys issues another profit warning

Unisys Corp. (NYSE: UIS) said Thursday it sees lower-than-anticipated revenue and earnings for the second quarter due to the deferral of some contracts and weakness in its Federal government and financial services businesses. It also cited currency fluctuations.

Shares in the computer services supplier closed at 23 1/8 Wednesday, well below their 52-week high of 49 11/16. The company also warned it would miss estimates in its first quarter, but managed to hit lowered expectations. It blamed a Year 2000 hangover and reorganization of staff for the first quarter problems.

The company expects second-quarter earnings, before the previously announced after-tax charge of $20 million for the retirement of debt, to be about 18 to 20 cents a share on a diluted basis. First Call was expecting the company to earn 37 cents a share, the same as in the second quarter of 1999.

Revenue is expected to be $1.62 to $1.65 billion, a decrease of 13 to 15 percent compared to 1999's second quarter.

The company said that as "clients are testing the waters by conducting pilot implementations, the company is seeing delays in the initiation of new contracts."

It expects business to improve sequentially over the balance of the year as clients move into implement their e-business infrastructures.

Unisys expects sequentially improving revenue over the remainder of the year. But overall, the company expects a mid single-digit percentage decline in full-year 2000 revenue and earnings per share, excluding the second-quarter extraordinary charge, compared to 1999 revenue levels.

Based on current rates, Unisys also said currency translations, particularly in Europe, to have a 3-4 percentage point negative impact on second quarter and annual sales.

The company sees declines in both its services and technology revenue. Second-quarter services revenue and orders show low double-digit percentage declines compared to the year-ago period, but are up sequentially from the first quarter of 2000. Technology revenue is expected to decline by a high single-digit percentage against very strong levels a year ago.

Technology orders are expected to increase over the year-ago period, and market acceptance of the new Unisys e-@ction ES7000 line is expected to improve results as shipments ramp up in the fourth quarter and into 2001.

Unisys also announced Thursday the finalization of its original equipment manufacturer contract with Compaq Computer Corp. (NYSE: CPQ) under which it will deliver Unisys CMP-based systems. This, in addition to other OEM and reseller partnerships, will help drive volume sales of these new servers into the marketplace, the company said.

Unisys competes with Hewlett-Packard (NYSE: HWP), IBM (NYSE: IBM) and Compaq (NYSE: CPQ).

The company will release its actual second-quarter results on Tuesday, July 18, before the opening bell.