Unisys Corp. on Wednesday said it is laying off 1,900 more people, bringing global job losses to 5,500 since October as the technology services and computer hardware firm struggles to revamp its business.
The Blue Bell, Pa.-based company also posted a much wider than expected second-quarter loss.
Unisys shares fell 15.8 percent, or 97 cents, to $5.18 in afternoon trading on the New York Stock Exchange. Volume was heavy.
The company said it would cut 1,900 more jobs in addition to 3,600 disclosed last October. The layoffs, constituting about 15 percent of total workforce, would save Unisys at least $325 million annually by the second half of next year.
"It's significantly higher than our original expectation," Joe McGrath, chief executive of Unisys, said in a conference call with analysts. But "getting our cost structure right would be critical to our success," he added.
In the second quarter, Unisys posted a net loss of $194.6 million, or 57 cents per share, compared with a loss of $27.1 million, or 8 cents per share a year ago. The results included a pretax charge of $141.2 million to cover job cuts for 1,900 workers _ 750 of whom are in continental Europe.
Revenue slipped to $1.41 billion from $1.44 billion a year ago, as its consulting and systems integration business fell by 9 percent and enterprise server sales dipped by 12 percent.
Analysts polled by Thomson Financial expected a loss of 7 cents a share on revenue of $1.45 billion.
McGrath said order delays contributed to the decline in second-quarter revenue. Several orders were pushed back to the third quarter, he said, so a rebound is expected in the second half of the year.
Meanwhile, Unisys is beefing up its operations in countries where labor is less expensive, such as India, China, Hungary and other central- and eastern European countries.
McGrath said Unisys is nearly done staffing a new facility in Bangalore, India's answer to Silicon Valley. A second Bangalore office will be opened later this summer.
Unisys has 1,800 workers in these low-cost countries, most of them in India. McGrath said the company expects to boost its workforce in these areas to 6,000 by 2008.
Jason Kupferberg, an analyst at UBS, said cost cuts at Unisys will make the company more competitive. He believes investors overreacted to the earnings news.
"Frankly, I think the stock is being overpenalized for the quarterly results, which admittedly were weak. But expectations weren't that high going into the quarter," said Kupferberg.
