Unisys said that its second quarter earnings were better than expected because efforts to control expenses had paid off.
The hardware and services supplier saw revenues increase by 9 per cent to $1.89 billion, while net profits rose to $119.7 million or $0.38 per share from $90.1 million or $0.24 per share in the year ago period.
The First Call analysts' consensus estimate had expected income of $0.33 per share, which caused the firm's share price to jump $0.375 to close at $44.4375.
Unisys also increased profit margins to 12.5 per cent compared with 10.7 per cent in the year ago quarter and cut selling, general and administrative expenses to 18.1 per cent of revenues from 19 per cent a year ago.
Lawrence Weinbach, the company's chief executive, said: "We delivered a solid all round performance in the second quarter. At the top line, we achieved double digit revenue growth on a constant currency basis driven by growth in both our services and technology businesses."
He continued: "At the bottom line, continued progress in controlling expenses allowed us to increase our operating profit margin nearly two percentage points to 12.5 per cent. Our earnings also benefited from our ongoing efforts to reduce interest expense and eliminate preferred stock dividends."
He added that he was confident Unisys would meet or exceed current earnings estimates of $1.45 per share for fiscal 1999, particularly because global economies were improving and the Internet was spurring growth.
The company had also made progress in strengthening its capital structure, he continued, by the recent call of its remaining 13.5 million outstanding shares of Series A preferred stock.
When this is completed on 2 August, Unisys will have completed the programme that it started earlier this year to eliminate $106 million in annual preferred dividends.
Weinbach explained: "In less than two years, we have cut debt by $1.2 billion and eliminated $1.4 billion of preferred stock. We will go forward with a fundamentally different capital structure that supports our goal to build a highly profitably $11 billion franchise by 2002."
He expects earnings to grow at twice the rate of sales.
Unisys also said it would restate its 1996 and 1997 financial results to account for warranty costs related to PCs and low end servers prior to it discontinuing its manufacturing operations in 1998.
The firm's 1997 earnings per share were restated to a loss of $5.20 from losses of $5.30 and its 1996 earnings per share were restated from a loss of $0.44 to losses of $0.41.
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