Article Abstract:
Unisys Corp will post a $648.2 million loss for the 3rd qtr 1989, signalling the computer company's plan to take write-offs in 1989 in hopes of a more stable 1990. But the loss has analysts wondering whether Unisys can bounce back at all from its financial problems, let alone within a year. Unisys posted revenue of $2.35 billion in the 3rd qtr, a small increase over 3rd qtr 1988, but had a net operating loss of $30 million. Severance costs of $230 million from laying off 8,000 employees and losses of $150 million from fixed-price government contracts contribute to Unisys's financial woes. Debt at Unisys is also reaching crisis proportions. Currently it stands at about $4 billion, or 50 percent of the company's total capitalization. Interest on the debt totals $100 million per quarter. Unisys management sees prices continuing to drop in the industry and is reorganizing its entire structure.
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Article Abstract:
Analyst's view Unisys Corp's restructuring program favorably, saying it may help return Unisys to profitability but will halt growth plans. Some analysts, though, point out the company's $3.7 billion debt and $400 million before-tax interest payment. With a $25.1 million 1st half loss and a 3rd qtr charge to cover restructuring, Unisys is not likely to do more than break even in 1989. Unisys' plan calls for a $400 million reduction in costs by the end of 1989 and laying off seven to eight percent of its workforce. Some analysts wonder if the plan is enough, saying it will only work if US demand returns in 1990. Unisys Chmn W. Michael Blumenthal remains optimistic and emphasizes Unisys' accelerated move into faster-growing segments of its business such as software, services, workstations and computer using Unix.
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Article Abstract:
Unisys Corp plans to cut its staff by 7,000 to 8,000 in a reorganization strategy designed to return the company to profitability. About 6,300 employees will be laid off and the remainder will come through attrition and early retirement. Unisys claims the staff reduction will lower its break even point from $10 billion to $8.5 billion by 1990. Most job reductions will come from corporate staffs, where management layers will be eliminated and marketing support will be centralized. Manufacturing operations will be consolidated by closing down two plants and winding down a third. Securities analysts are encouraged by Unisys' new cost reduction plan, though the company's high debt and low stock price will make gaining profitability a struggle.
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