Why Unisys Corporation Shares Plunged Today

Is Unisys' drop meaningful? Or just another movement?

Apr 23, 2014 at 6:31PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Unisys Corporation (NYSE:UIS) fell more than 11% Wednesday after the company first quarter loss widened significantly from the same period last year.

So what: Quarterly revenue declined 6% year-over-year to $762 million, falling well short of analysts' expectations for sales of $826.13 million. This translated to an adjusted net loss of $0.74 per diluted share, compared to a loss on the same basis of $0.26 per share in the first quarter of 2013.

Now what: After noting Unisys' cash from operations improved over the same year-ago quarter, management blamed the revenue and margin shortfall simply on lower sales of technology and IT services projects. Still, the company remained optimistic regarding the ability of its new products -- including its cloud-based offerings, Stealth cybersecurity software, and Forward! fabric-basd server platform -- to drive growth in the second half of the year for the technology business.

Even so, nobody likes to see red ink, and investors are understandably wary those opportunities will pan out as promised. As a result, and even with shares trading at a rock-bottom 6.5 times next year's estimated earnings, I think investors would be wise to remain on the sidelines for the time being.

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Steve Symington and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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