Unisys Corp has reported a strong surge in profitability in the third quarter as it continues to focus on high margin outsourcing opportunities amid declining product sales.
In the three months to September 30, 2002, the Blue Bell, Pennsylvania-based company almost trebled its net profit from $20.9m to $59m, on revenue that fell by 3% to $1.33 billion. Unisys’ sales suffered outside its domestic market, with international revenue declining 8% to $713m in the quarter including steep falls in Europe and Latin America. The company’s US sales grew 3% to $619m.
The company’s IT services business, which accounted for 77% of total sales, increased its operating profit from $23.6m to $58.3m year-on-year, on revenue that fell 4.5% to $1.02 billion. Chairman and CEO Larry Weinbach said that revenue from Unisys business process outsourcing business had grown at a double-digit percentage rate on the back of contract wins with RAMS Home Loans in Australia and Air Canada.
Weinbach said that the type of services opportunities that the company is pursuing are business process and IT outsourcing, systems modernization, mortgage processing and IT infrastructure services. He added that the company hopes to win more business with the US government on the back of its landmark $244m deal to build the technology infrastructure for the US Transportation Security Administration.
Unisys’ technology division reported a 25% increase in operating profit during the third quarter on revenue that fell 6.8% to $378.9m. Weinbach said that demand for hardware and software products remains weak, although he claimed that the company had experienced good acceptance of its ClearPath Plus server products, as well as modest revenue gains in sales of its Intel-based ES7000 server lines.
Looking ahead, Weinbach said the company was on course to increase earnings per share by 50% in full-year 2002 over the 48 cents it reported in 2001. He expects full-year revenue to decrease by between 8.6% and 7% to $5.5 billion to $5.6 billion.