Thursday January 14, 2:31 pm Eastern Time
INTERVIEW - Unisys CEO sees no Brazil drag on 1999
By Eric Auchard
NEW YORK, Jan 14 (Reuters) - Unisys Corp. (NYSE:UIS - news) remains comfortable with the current mid-range of Wall Street earnings forecasts for 1999, even in the event of further currency devaluations in Latin America, its CEO said on Thursday.
In a phone interview following the Blue Bell, Pa.-computer services company's fourth-quarter report, Chairman and Chief Executive Larry Weinbach said he was comfortable with 1999 brokerage earnings estimates of between $1.25 and $1.30 a share.
Weinbach said additional repurchases of the company's 26 million or so remaining preferred shares would add to 1999 earnings per share beyond that range, but that such purchases were subject to market conditions.
He said the company's internal forecast for its financial results for the coming year had figured in a possible 7.5 percent devaluation of the Brazilian real and that the company's results could withstand further currency hits.
On Wednesday, Brazil slashed the value of its currency by more than 8 percent, leading to a wave of devaluations across Latin America and concerns about the move's ripple effects on world markets, as well as U.S. companies doing business in the region's biggest economy.
''We are not uncomfortable with our projections even if further devaluations reach the 15 to 18 percent range,'' Weinbach told Reuters.
Brazil accounts for between 5 and 5.5 percent of total Unisys revenues. Latin America overall produces 11 percent of the total, although no other country contributes more than 2 percent, he said.
Generally, Weinbach said Unisys expected overall 1999 revenues to grow between 8 and 10 percent, and that earnings growth would be twice the rate of estimated revenue growth.
A year or two out, as the full impact of the company's turnaround is realized, Weinbach repeated his forecast that Unisys would show double-digit growth in 2000 and 2001.
While noting the progress in the two-thirds of its business now devoted to computer services, he said the company had calculated flat revenue growth in computer hardware server sales during 1999 because of Year 2000 concerns among customers.
Unisys anticipates a wave of corporate buying of its powerful server machines in the first half of 1999, offset by a sales slowdown in the second half, as customers focus on preparing existing computer systems for the 2000 date change.
''Server sales for 1998 were in the double-digits,'' Weinbach said. ''We see very strong growth in the first half this year, but we see a slowing in the second half,'' the CEO said.
''Year-on-year, we see flat sales between 1998 and 1999,'' he said of hardware sales -- one-third of total revenues.
Earlier, the company posted fourth-quarter net income of $139 million, up 60 percent from the year-ago quarter, as the long-time mainframe computer maker reported solid progress on its transformation into a computer services provider.
The latest quarter's results were 2 cents per share ahead of Wall Street's consensus expectations of 40 cents per share, according to First Call, which compiles brokerage estimates.
After the report and a conference call with analysts, Unisys stock gained $1 to $34.44 in active composite trading on the New York Stock Exchange by mid-afternoon Thursday. |
