Restructuring and tax expenses dragged down Unisys’ second-quarter bottom line, as revenue inched down 2% to $1.38bn and looks to stay flat for the rest of the year, the company said.
The company incurred a $24m restructuring charge and a $40.6m tax expense, leading to an overall loss of $65.5m for the quarter, or $0.19 per share. Analysts had been looking for a loss of $0.05 per share excluding charges on revenue of $1.39bn, according to Thomson Financial.
The top line was affected mostly be a decrease in Unisys ‘ consulting and systems integration business. CEO and president Joe McGrath said that this business, which was previously very fragmented and contained many separate programs has been hit hard by the company’s restructuring campaign.
But McGrath said the consulting and integration bookings were up on the quarter, in keeping with the general rebound taking place in the consulting market. He said this new work should boost performance in the second half of the year.
McGrath also highlighted improvement in the company’s services margins, and he affirmed its plan to reach operating margins of 8% to 10% next year.
Unisys’ restructuring program continues to march on, and the company said it made 550 job cuts for the quarter, primarily in the US. It expects its restructuring campaign up to this point to save an annualized $340m for the second half of 2007 and more than $365m in 2008.
In separate Unisys news, the company announced a contract extension worth $72m over six years to provide server and network management services for the city of Chicago. The contract also carries a one-year option worth another $12m.
Unisys shares were down nearly 6% to $8.72 on Tuesday after the disappointing earnings news.