Unisys Consulting

Service experts

Having started life as a manufacturer of computers, Unisys' business model has evolved over the years to the point where its technology solutions (i.e., the stuff it builds) now take a back seat to its service offerings.  Indeed, the majority of the firm's revenue now comes from the four sectors that comprise its services unit: consulting and systems integration, outsourcing, infrastructure services and core maintenance work.  Together, those sectors contribute more than 85 percent of Unisys' annual revenue, while the technology solutions unit contributes the remainder.

All of that positions Unisys as one of the leading IT services companies in the world, although recent years have given the firm some serious issues to worry about (see below). And, while even the firm's own research suggests that the perils of the present economy will continue to impact client budgets, and therefore spending with Unisys, there is some reason to be cheerful: The firm has a new CEO in the shape of Ed Coleman, and continues to offer services across five major industrial sectors.  Sure, one of those happens to be the particularly hard-hit world of financial services, but the list also includes the worlds of communications, commerce, transportation and the public sector, meaning that Unisys is at least positioned across a broad range of industries as it prepares to wait out the downturn.

Unisys' annus horribilis

It would be fair to say that Unisys had something of a rough year in 2008. Having posted losses of $79.1 million in 2007 (which included $66 million in restructuring charges), the firm's fiscal fortunes continued to decline throughout 2008, prompting CEO Joseph McGrath to step down in September after nine years at the firm, three at the helm. While he was replaced the following month by corporate transformation specialist Ed Coleman, the company's fortunes continued to decline in a difficult economy. So poorly did Wall Street rate the company's performance, in fact, that it was dropped from the benchmark S&P 500 index in November, following a stock price decline in excess of 85 percent over the course of the year. (While there is of course every chance that it will recover, perhaps the most ignominious part of the whole affair is that a financial company, People's United Financial, replaced it on the list in the same year that most of the financial industry imploded.) The firm's full-year financial results did little to allay fears over its fiscal viability, however, with declining revenue leading to a loss of $130.1 million for 2008.  With results like that, and a specialist in corporate transformations at the helm, what happened in December 2008 wouldn't have come as a surprise to many: The firm announced a restructuring effort, including 1,300 pending layoffs, to be completed throughout 2009.  

Among the additional cost-cutting measures that Coleman deemed necessary to reversing the firm's fortune, the company estimates these will save some $225 million annually, is a plan to consolidate offices, freeze salaries, and end 401(k) matching at the company.  Further plans to simplify the company's complex business structure have also been mooted, while speculation mounted in late 2008 that the company would take advantage of its low share price to go private.

A rocky road

Unisys has struggled financially throughout the 2000s, unlike some of its IT competitors, it never quite recovered from the impact of the dot-com bust.  The firm was formed in 1986 from the merger of Sperry Corporation and Burroughs Corporation; throughout the 1950s Sperry had existed as Sperry Rand, gaining fame for its UNIVAC computers, which it licensed to IBM.  Burroughs, which got its start in 1886 as an adding machine company, also moved into the computing business in the 1950s, developing mainframes, personal computers and multiprocessors.  In 1987, the newly-created Unisys began producing microcomputers, and in 1992 it was chosen by Nasdaq executives to build the exchange's mainframe computers.

The 1990s were good to Unisys, which has gradually shifted its focus from technology solutions and development to IT services, consulting and outsourcing.  The collapse of the internet bubble was a serious stumbling block, however, leading to several years of dismal earnings.  After a brief surge in 2003, Unisys's profits slumped again, despite CEO McGrath's assurance that he was taking steps to put the firm back on track.  By 2006, layoffs had climbed to 10 percent.



Unisys Consulting


Corporate Headquarters
Unisys Way
Blue Bell, PA 19424
Phone: (215) 986-4011
www.unisys.com

STATS


  • Employer Type: Public
  • Stock Symbol: UIS
  • Stock Exchange: NYSE
  • Chairman and CEO: J Edward Coleman
  • 2010 Employees: 23,000

Major Office Locations

  • Blue Bell, PA

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