Unisys Corp has stormed back into profitability with second quarter profits of $41.9m compared with the meager $5.3m it earned in the same period last year. Revenue was up 5% to $1.59bn though the company said results were hit by the effect of a currency translations on its international operations. In the context of recent results from this sector, Unisys’ performance is pretty mediocre. But given an organization that has struggled to find a role since its ill-conceived formation from the merger of Burroughs Corp and Sperry Corp in 1986, the figures do offer hope. Chairman and chief executive James Unruh said: We continued to build momentum in the quarter. Revenue was up, cash flow improved and our operating profit margin almost doubled from a year ago to a margin rate of 8.1% of revenue. He drew comfort from the fact that mid-term earnings per share are $0.02 compared with a loss of $40 in the same period last year. We are on track to achieve our financial goals for the year, he said. Unruh can take the credit for the transformation of the loss-making, debt- ridden company that he took over in 1990. Alas, he has decided to quit and whoever is found to replace him still has a major task on their hands. Star performer is the Computer System Group which saw revenue grow 10% on the strength of demand for its ClearPath servers. But the rest of the group has yet to show it is worth keeping. The Information Services Group is still in the red though it cut operating losses from $49.5m to $17.8m over the first two quarters and is on target to become profitable by the end of the year. Global Customer Services increased revenue by 11% on the same quarter last year but margins were down due to the continuing business mix shift from proprietary maintenance to distributed computing support services. Overall, its cash balance was reduced by $214m in the quarter and it has agreed a $200m line of credit with a syndicate of banks to replace a one- year agreement for the same amount. Unisys has embraced the Windows NT operating system, believing that this is where future growth lies. But it is puzzling why Unruh has decided to quit given his enthusiasm and optimism for the future. Unisys is square in the middle of some of the most exciting markets in this dynamic industry, he says. Also in the same markets, alas, are companies with more impressive track records than Unisys. A great deal depends on who is found to replace Unruh.
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