A good article from ComputerWorld:
computerworld.com
Unisys lands on Steady Ground
Focus on services marketdrives vendor's revenue
Jaikumar Vijayan
05/24/1999
ComputerWorld
Page 91
(Copyright 1999 by Computerworld, Inc. All rights reserved.)
Unisys lands on Steady GroundFocus on services marketdrives vendor's revenueBy Jaikumar Vijayan
The information technology services business is paying off big-time for Unisys Corp. The once-struggling mainframe vendor has racked up five better-than-expected quarters in a row, trimmed operating costs and increased formerly drooping revenue. It nearly doubled profits between 1997 and last year.
Unisys finished 1998 with revenue of $7.2 billion, compared with $6.6 billion in 1997. Profits, at $387 million, were up 94% from $199 million a year ago. Earnings per share grew 130% to $1.06 in the same period. The company's stock has risen steadily from about $27 six months ago to just under $34 last week.
"They have far exceeded expectations both in terms of the [speed] of their financial improvement and the degree to which they have improved their [long-term prospects]," said Richard Jacobs, an analyst at Janney Montgomery Scott Inc. in Philadelphia.
Much of that momentum is the result of its tight focus on the services business, a strategy begun by former CEO James Unruh and accelerated by current CEO Lawrence A. Weinbach, who took charge of an ailing Unisys in September 1997 after an eight-year stint as chief executive of Andersen Worldwide.
Weinbach's strategy has centered on selling services such as large-scale systems integration and maintenance.
Unisys has also developed hardware, software and service bundles for vertical industries that include the financial services, transportation and government sectors.
Today, more than 68% of Unisys' revenue comes from such services -- a figure that Weinbach says he hopes to push to 75% in the next few years. It has also slashed debt and repurchased more than half its stock, saving millions of dollars in interest and dividend payments.
"The new management has fashioned a comeback that few of us believed they would be capable of pulling off" so quickly, said Michael Geran, an analyst at Pershing, a division of Donaldson, Lufkin & Jenrette Securities Corp. in Jersey City, N.J. "The challenge will be to grow it from here." |
