Unisys' Y2K Hangover Socks Q1 Sales

FRAMINGHAM (04/05/2000) - Once thought to be exterminated, the year 2000 (Y2K) bug has managed to put the bite on first-quarter revenue for Unisys Corp.

The Blue Bell, Pennsylvania-based electronic-business solutions company announced yesterday that its first-quarter revenue will be a lower-than-expected $1.66 billion to $1.69 billion.

Unisys will release its actual first-quarter results next Thursday, before trading opens on the New York Stock Exchange.

The company cited lingering weakness in its federal government business and a slow recovery in its financial services business following the Y2K transition as the key contributors to its lowered revenue outlook.

During the quarter, Unisys implemented a new go-to-market model for its 1,000 largest clients worldwide. While the company said it was careful to minimize disruption to client interfaces during the transition, the implementation of the new approach required additional training, organizational meetings and resource reallocation that resulted in less time devoted to sales efforts early in the quarter.

"The new year got off to a slower-than-expected start following the Y2K transition," said Unisys chairman and CEO Lawrence A. Weinbach in a statement.

"We also experienced some impact in the quarter from organizational changes involved in implementing our new, integrated go-to-market approach. While we saw a pickup in sales and order activity late in the quarter, we were not able to overcome the slow start.

"Also impacting our revenue in the first quarter were continued negative foreign currency translations, as well as difficult comparisons to an unusually strong first quarter of 1999, which benefited from accelerated customer spending in preparation for the Y2K transition," said Weinbach.

Weinbach said he expects to see "sequentially improving results through 2000, leading to double-digit revenue growth in the second half of the year."

The company's services business has been slower to rebound from the year 2000 transition than its technology business. Weinbach said Unisys has a big year planned on the technology front, including growing interest in its new Cellular MultiProcessing technology and an Intel-based system capable of running Windows 2000 with mainframe-class performance and scalability.

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