Unisys' Q1 Loss Worsens Year over Year - Analyst Blog

Unisys Corporation UIS reported first quarter 2014 net loss of $53.5 million or $1.15 per share compared with a net loss of $33.9 million or 77 cents per share in the year-earlier quarter. The year-over-year decrease was primarily attributable to a decline in revenues.

Excluding one-time items such as pension expense, non-GAAP loss in the reported quarter was 74 cents per share compared with a loss of 26 cents in the year-ago quarter.

Total revenue for first quarter 2014 decreased 6.0% year over year to $761.7 million from $809.9 million in the prior-year quarter. The decline in revenues was due to lower sale of technology and IT service projects. While revenues from the U.S declined 5%, international revenues dropped 7% year over year.

Segment Results

In the Services segment, revenues decreased 4% year over year to $690.9 million driven by lower outsourcing and infrastructure services revenue. Service orders decreased year over year driven by lower outsourcing orders. Total Services backlog at quarter-end was $4.5 billion. Gross profit margin for the segment in the reported quarter declined to 15.8% from 17.4% in the prior-year period.

Technology segment revenue decreased 19% from the year-ago quarter to $70.8 million driven by lower sales of ClearPath enterprise software and servers. First-quarter 2014 Technology gross profit margin dropped to 42.5% from 45.8% in the year-ago quarter.

Balance Sheet/Cash Flow

Cash generated by operating activities totaled $20.1 million in the first quarter of 2014 compared with $14.1 million in the prior-year quarter. The company incurred capital expenditure of $45 million in the reported quarter versus $26 million in the year-earlier quarter. Free cash flow before pension contributions increased to $31 million in the reported quarter from $15 million in the year-ago quarter.

At quarter end, Unisys had a long-term debt burden of $210 million, with cash and cash equivalents of $614 million.

Management expects to face continuing challenges in the coming quarters as it grapples with the softness in the Technology segment and Services segment.

Unisys currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now include Cypress Semiconductor Corporation CY and Marvell Technology Group Ltd MRVL, both carrying a Zacks Rank #1 (Strong Buy) and EPAM Systems, Inc.  EPAM having a Zacks Rank #2 (Buy).