Unisys Suffers $1.3-Billion Loss During Quarter : Technology: Saddled with massive debt and hurt by an industry sales slump, the computer firm plans to lay off another 10,000 workers.
Reeling under its enormous debt load and stung by the prolonged worldwide computer slump, Unisys Corp. on Tuesday reported a second-quarter loss of $1.3 billion and said it will lay off another 10,000 employees over the next year.
The newest cuts, which will bring to 22,000 the number of jobs targeted for elimination since early last year, underscore the deep problems still plaguing Unisys as it grapples with the huge debt assumed when it was formed in 1986 through the merger of Sperry and Burroughs.
Although the company, the nation’s fourth-largest computer maker, did not reveal where the cuts will be made, California--home to more than 7,000 Unisys employees--is sure to feel the ax.
Major Unisys manufacturing plants are located in Mission Viejo, where 1,000 workers make mainframe and mid-range computers; Rancho Bernardo, where 1,000 workers make semiconductors, and, San Jose, where nearly 1,600 employees make computer workstations. Marketing offices are scattered throughout the state, with major Southern California sales facilities located in Lake Forest and Santa Ana.
However, Unisys’ defense plants, including that in Camarillo, will not be affected by the cuts.
Unisys said $1.2 billion of its quarterly loss is the result of a special charge to cover the cost of the layoffs, expected plant closings and other cost-cutting measures.
Unisys executives said the latest restructuring--its second major contraction announced this year--should allow it to turn a profit by next year, even if the computer industry’s fortunes don’t improve significantly.
“We are lowering our cost structure to a level below that needed to support our conservative revenue projection for 1991 and 1992,” Chairman James Unruh said in a statement.
Sales in the second quarter were $2.2 billion, down 11% from the $2.47 billion posted in the year-ago quarter. The company’s second-quarter loss, equivalent to $8.24 a share, contrasts with a profit of $11.8 million in the year-ago period. However, last year’s earnings translated to a per-share loss of 9 cents after payment of preferred dividends.
Despite the latest poor showing, Wall Street was cheered, sending Unisys stock up 50 cents per share to close at $4 in heavy New York Stock Exchange trading. Analysts said they were pleased at the prospects of deep cost cutting, noting that it will give Unisys additional time to pay off its debt and get its business back on keel.
However, analysts said they remained decidedly unsure whether Unisys has much of a future in the fast-moving and hotly competitive computer business.
“They are less likely to go broke today than they were yesterday,” said one analyst who asked to remain anonymous. “But that’s not to say that they will survive. The world doesn’t stop while you restructure your business.”
Since January, Unisys has sold assets worth about $500 million and has applied about $250 million of the proceeds toward reducing its debt, which remains at $3.8 billion.
Unisys Corp. at a Glance Main Business Design and manufacture of computer systems, related products and services. Employees: 72,000 Stockholders: 52,300 Headquarters: Blue Bell, Pennsylvania Stock: Tuesday’s close: $4 12-month stock range: $12.75-$1.75 Income Statement In millions, except per-share figures
Quarter 1991 1990 (ended June 30) Revenue $2,202.8 $2,470.8 Earnings (loss) ($1,299.8) $11.8 Per share ($8.24 ( $.09)
Six months 1991 1990 (ended June 30 Revenue $4,261.7 $4,777.1 Earnings (loss0 ($1,398.0) $8.6 Per share ($9.03) $0.28)
