Information technology service provider Unisys Corporation (UIS) reported dismal first quarter 2013 results with a loss of $33.9 million or 77 cents per share compared to a net income of $13.4 million or 30 cents per share in the year-earlier quarter. The lackluster performance was primarily attributable to a year-over-year decline in revenues in both of its operating segments.
Excluding one-time items such as pension expense and debt charges, non-GAAP loss in the reported quarter was 26 cents per share compared to earnings of 97 cents in the year-ago quarter. Unisys failed to meet the Zacks Consensus Estimate of 57 cents for the quarter.
Total revenue for first quarter 2013 decreased 12.8% year over year to $809.9 million and missed the Zacks Consensus Estimate of $897 million. While revenue from the U.S. dipped 15%, international revenue declined 11% year over year. Unisys witnessed an adverse impact of one percentage point in the reported revenues due to foreign currency fluctuations.
In the Services segment, revenues plummeted 12.1% year over year to $723.0 million with a decline in income from systems integration, infrastructure services and core maintenance, partially offset by a growth in IT outsourcing. Order signings decreased marginally as total services backlog at quarter-end remained relatively flat from year-end 2012 at $5.1 billion. Gross profit margin for the reported quarter declined to 17.4% from 18.9% in the prior-year period, while operating profit margin declined to 3.1% from 5.0%.
Technology segment revenues decreased 17.6% year over year to $86.9 million as ClearPath software and servers registered weak sales in the reported quarter. Gross profit margin fell to 45.8% from 62.2% in the year-ago quarter, while operating profit margin declined to 0.2% from 25.6%.
Balance Sheet/Cash Flow
Cash generated by operating activities totaled $14 million in the first quarter of 2013 compared to $33 million in the prior-year quarter. Capital expenditures incurred were $26 million in the reported quarter versus $30 million in the year-earlier quarter. This in turn resulted in a free cash flow of $12 million for first quarter 2013.
At quarter-end, Unisys had a long-term debt burden of $210 million, with cash and cash equivalents of $628.6 million.
Management expects to face continuing challenges in the coming quarters as it grapples with the softness in the Services segment and adjusts its cost structure in line with its falling revenues. At the same time, Unisys remains focused on its Technology segment and expects to reverse the decline in systems integration.
Unisys presently has a Zacks Rank #4 (Sell). Other companies in the industry that are worth mentioning include Hewlett-Packard Company (HPQ) and Camelot Information Systems Inc. (CIS), each carrying a Zacks Rank #2 (Buy), and PCM, Inc. (PCMI) that carries a Zacks Rank #1 (Strong Buy).
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