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Unisys sees 1Q, 2Q sales slump

Unisys (NYSE: UIS) said Tuesday that its first quarter sales will be lower than expected due to lingering Year 2000 problems. The company, which is comfortable with first quarter estimates, lowered expectations for the second quarter.

In its first quarter, the company said that it expects revenue to be in the $1.66 billion to $1.69 billion range. The company said it is comfortable with first quarter estimates of 33 cents a share to 35 cents a share. First Call consensus calls for a profit of 34 cents a share.

Unisys, which recently gained on takeover talk, attributed the sales slowdown to "a slower-than-anticipated rebound in sales following the Year 2000 transition as well as the slow start in the quarter associated with the implementation of a new organizational model."

The company, which reports earnings April 13, said slower in its government and financial services business hurt revenue. In addition to the sales slump, Unisys said it implemented a new system to deal with its largest clients. The new system distracted the company from pushing sales, said Unisys.

In the first quarter, the company said its technology business has picked up faster than services. Revenue from its technology business will decline less than expected because of strong server demand at the end of the quarter. First quarter revenue and orders in the services business are expected to decline compared to year-ago levels, said Unisys, which added that services proposals are starting to pick up.

As for the outlook for the second quarter, Unisys said it expects double-digit revenue growth in the second half, but revenue will be down in the second quarter. Earnings for the second quarter sans charges will be flat with a year ago, or about 37 cents a share. First Call consensus was expecting earnings of 43 cents a share.

For the full year, Unisys expects revenue growth in the 4 percent to 6 percent range, with earnings of $1.75 - $1.80 per share before the debt retirement charges.

Unisys, which competes with IBM (NYSE: IBM), Compaq (NYSE: CPQ) and Hewlett-Packard (NYSE: HWP), isn't the first company to suffer from a lingering Y2K hangover.

Dell Computer (Nasdaq: DELL) said customers delayed orders in the fourth quarter due to Y2K. The company's fourth quarter results hit lowered expectations.

Unisys also had Y2K problems in the fourth quarter as sales were flat. >