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Unisys Shares Plummet Nearly 50 Percent On Lower Guidance

Joseph F. Kovar

‘Unisys’ transformation is taking hold. At the same time, we experienced some unexpected challenges since the last earnings call that has led us to lower our revenue and profitability guidance for the year,’ says Unisys Chairman and CEO Peter Altabef.

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Investors Tuesday punished global IT solution provider Unisys a day after the Blue Bell, Pa.-based company cut its full-year financial guidance, sending shares down about 48 percent.

The IT services and consulting company late Monday unveiled its third fiscal quarter 2022 finances, but waited until Tuesday morning to hold its quarterly financial analyst conference call.

Unisys now expects fiscal year 2022 worldwide revenue to fall between 3.5 percent and 5.5 percent compared to fiscal 2021, non-GAAP operating profit margin of 6.0 percent to 8.0 percent, and adjusted EBITDA margin of 14.5 percent to 16.5 percent.

[Related: Unisys CEO Altabef: COVID-19 Impact Is Making The Company Stronger]

Unisys also said it has filed a Form 12b-25 with the U.S. Securities and Exchange Commission stating that the company is unable to file its quarterly Form 10-Q report for its third fiscal quarter 2022, which ended September 30.

The company said its board of director’s audit and finance committee is investigating how some parts of the company’s information was disseminated and communicated, and the investigation could determine one or more material weaknesses in its internal controls related to financial reporting.

Three months ago, Unisys said it expected fiscal year 2022 revenue growth of negative 1.0 percent to positive 1.0 percent, non-GAAP operating profit margin of 7.5 percent to 9.0 percent, and adjusted EBITDA margin of 16.0 percent to 17.5 percent.

This compares to fiscal year 2021, which saw year-over-year revenue growth of 1.4 percent, non-GAAP operating profit growth of 25.6 percent, and adjusted EBITDA growth of 15.3 percent.

Unisys’ 48-plus-percent share price Tuesday fall to $4.41 per share was an anomaly in the channel business. Competitors like Computer Task Group, Conduent, Xerox, Connection, and ePlus Tuesday saw share price dips of between 0.5 percent and 4.3 percent, while CDW and Insight rose 1.0 percent to 2.0 percent.

Unisys’ second fiscal quarter 2022 was a tough one for the company. Total revenue fell 5.5 percent year-over year to $461.2 million, while non-GAAP net loss was $40.1 million versus last year’s net loss of $18.7 million.

Unisys Chairman and CEO Peter Altabef, in his prepared remarks to financial analysts Tuesday morning, focused on how the company is transforming its business.

“We continue to make progress in shifting our business to our value solutions in the high demand focus areas of modern workplace and digital platforms and applications,” Altabef said. “Clients are seeing the value of our solutions in these focus areas, as evidenced by revenue growth approximately at or above in both of them. Our focus areas solutions are also higher margin, an indicator of increased profitability over time.”

Altabef described the modern workplace market one with an approximate value of $40 billion and a three-year compound annual growth rate, or CAGR, of about 12 percent.

Altabef also said Unisys is also banking on a new branding campaign coming in the fourth fiscal quarter for growth.

“Our transformation is beginning to take hold,” he said. “It will soon be fortified by a new brand identity and marketing campaigns designed to increase awareness for our company and our key solutions. We believe this platform will influence consideration in the market can be a catalyst for growth.”

Unisys’ new brand identity is the last mile of the company’s transformation, Altabef said.

“The new brand will bring our solutions to life in a meaningful, compelling way,” he said. “We believe our new marketing campaigns will increase market awareness, which in turn will help drive key sales metrics, such as leads, pipeline wins, and ultimately revenue and margin. The new identity addresses how we help clients meet the changing needs of the market while also serving as a key influential factor in our ability to retain, attract, and inspire talent.”

Joseph F. Kovar

Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at jkovar@thechannelcompany.com.

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