Information technology (IT) consulting firms such as Accenture
Unisys reported yesterday that second-quarter revenue slipped 2% to $1.38 billion over the past year. The company posted a net loss of $65.5 million, or $0.19 per share, considerably improving on the year-ago net loss of $194.6 million, or $0.57 per share.
The company did snag some decent contracts in the quarter. It signed a deal with the Federal Reserve Bank of Cleveland to install an electronic checking system, and won an $108 million extension to a contract with the L.A. Department of Public Social Services.
As part of its repositioning plan, Unisys took roughly $24 million in net pre-tax restructuring charges for work reductions and facility consolidations in Q2. Last year, management laid off 5,600 workers; it's reduced the employee count by 950 so far this year, reaching roughly 80% of its overall planned reductions.
For its next step, Unisys must drive more revenue. The company plans to reinvest most of its cost savings into growth initiatives, though management provided few specific details about what these plans might be. Unisys does have a strong presence in areas like federal government contracts, and it boasts expertise with technologies from companies such as Microsoft
By 2008, Unisys wants to reach an operating profit margin of 8% to 10%. This worthy goal would certainly get investors' attention, if met. But for now, uncertainty about how the company will reach its lofty goals will likely continue to weigh on the stock.
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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is ranked 2,419 out of more than 60,000 total participants in Motley Fool CAPS.
