Unisys Corp posted first-quarter earnings that were better than Wall Street expected, thanks largely to a growth in its services business. The Blue Bell, Pennsylvania-based company reported net income up 77.4% year-over-year at $111.2m, or $0.32 per share, when analysts surveyed by First Call were looking for just $0.24. Revenue for the quarter rose 9.9% from the year-ago quarter to reach $1.81bn.
Unisys said the strong showing was due to gains in its services business as well as improved sales of its ClearPath enterprise servers. Services revenue grew 13% as orders were up substantially and added to a growing backlog. Operating profit for the segment was $71m, up 47% from the prior-year period. The high-end server sales – the company outsourced its PC, laptop and entry-level server operations last year – helped gross margins for that part of the business rise 8.4% to 53.3% of sales.
Geographically, the US and Europe remained strong, the company said, while Asia-Pacific picked up enough to offset a decline in Latin America. Continued expense reductions also allowed the company to achieve an operating margin of 14%, up 4.5 points from last year’s first quarter and its highest in many years.
Unisys said it is cautious about technology spending in the second half of the year due to an accelerated purchasing pattern, especially in hardware, exhibited by customers in advance of the Y2K crunch. The company still believes that it can achieve its financial goals for the full year, however, although it expects to see a higher percentage of the year’s earnings in the first half than it has historically. Analysts are expecting EPS of $1.36 for the year.
