Fourth quarter results from Unisys show the company couldn’t sustain the surprise revenue growth it delivered in Q3. And despite some evidence of progress towards its strategic goals, the outlook for the long-term competitiveness of the company suggests it will continue to find the going tough.
Q4 revenue was $985m, down 6% y-on-y (with no impact from currency fluctuations). That’s disappointing after the modicum growth we saw in Q3 (see Unisys gets some pain relief in Q3). US Federal business was especially tough, but if we exclude that, the company’s revenue still fell by 3%. Take out the shrinking technology products business as well, and the remaining non-Federal services revenue managed a 2% rise. The comparable figure in Q3 was 12%. So, albeit on this very generous basis, we can say that Unisys made some progress in 2011 towards its goal of growing ITO and SI business at market rates, excluding some particular challenges in US Federal.
Over this side of the pond, the going looks to have been especially tough, with a 13% drop in revenue in the Europe/Africa region, and a 2% fall for 2011 as whole.
So 2011 was another difficult year for Unisys. Yes, there was some progress on paying down its debt burden, which rightly is a key strategic goal for the company. But total revenue for the year was down 4%, or 7% in constant currency. And despite trimming operating expenses by 5%, operating margin for the year still slipped (from 9.3% to 8.4%). Meanwhile the Q4 order numbers were OK (with a bright spot in ITO, where orders doubled) but there’s nothing to suggest that Unisys is set to bounce back to growth.
If like Unisys you didn’t grow in 2010 and 2011, well 2012 is not going to be a picnic either. But Unisys has its own specific challenges too. In its current shape it has the market presence of a niche player (take the UK, for example, where it now ranks 28th in IT services) but the portfolio breadth of an IT services and technology major – that’s not a recipe for growth.