Services firm sees lower revenues
Unisys will report lower-than-expected quarterly revenues because of sluggish government sales, a year 2000-related slowdown and restructuring issues.
The computer services company said it expects revenues of $1.66 billion to $1.69 billion for the first quarter, roughly 7 percent to 8 percent below year-ago totals. But it said earnings will still meet analyst targets of 33 cents to 35 cents a share.
Jay Grossman, a Unisys representative, said the company trimmed debt and eliminated preferred dividends. "Those decisions helped us offset the revenue loss, allowing us to feel comfortable with analysts' expectations of 33 cents to 35 cents a share," he said.
Shares in the Blue Bell, Pa.-based company were down $2.69, or 10.57 percent, to $22.75 in early trading.
The company beat analyst expectations for the fourth quarter of 1999 and projected a lift in future revenue growth.
Its stock soared 28 percent last week after German magazine Focus reported that telecommunications giant Deutsche Telekom is eyeing the computer services company, according to Reuters.
Unisys competes in the professional services market against rivals Electronic Data Systems, IBM Global Services, Computer Sciences Corp. and others.
Its financial services business has been slower than expected following the Y2K transition, the company said.
"We also experienced some impact in the quarter from organizational changes involved in implementing our new integrated go-to-market approach," Lawrence A. Weinbach, chief executive of Unisys, said in a statement.
Given the weaker-than-expected orders and revenues in the first quarter, Unisys sees a dip in revenues in the second quarter but still expects growth in the double-digits. It also expects second-quarter diluted earnings per share to be flat--compared to a year ago--before a previously announced one-time charge for paying $400 million of debt.
Reuters contributed to this report.