VAR500 This Week

It's earnings time, and Unisys, Cognizant, Insight and CSC had generally good reports. Some were astronomical, while others were more down-to-earth. Overall, the returns seem to indicate the tech sector may be slowly turning the corner as new contracts start trickling in.





In addition, one VAR500 company, Convergys, said goodbye to its president of 20 years and welcomed his replacement.

Unisys earnings indicate a turnaround at the computer services firm. The company reported a profit, or earnings, of $114.5 million for the fourth quarter of 2009, compared with a loss of $58 million in the same quarter of 2008. However, the 2008 figure included a $99 million pretax cost-reduction charge.



Revenue in the quarter declined 5 percent to $1.21 billion compared with revenue of $1.28 billion in the year-ago quarter. Services revenue, however, fell nine percent to $1.02 billion, as technology sales were up 19 percent to $192.4 million.





"Our fourth-quarter profitability and cash flow were particularly strong, driven by a more cost-efficient services business and strong sales of ClearPath systems," said Ed Coleman, chairman and CEO at Unisys, in a statement. "In 2010 we will focus on continuing to execute against our priorities of concentrating our resources more effectively, sharpening the value propositions for our offerings, improving the cost efficiency of our labor model, and simplifying our operations to reduce overhead."

Cognizant Technology Solutions reported revenue grew 20 percent in the fourth quarter of 2009, compared with the same quarter in 2008. Revenue registered at $902. 7 million for the quarter, and for the year overall revenue was $3.279, up 16 percent from the previous year.



"Despite a very difficult economy, Cognizant delivered strong results with 16 percent annual revenue growth. The investments we made in our business leave us in an even stronger position than when we entered 2009," said Francisco D'Souza, president and CEO of Cognizant, in a statement. "During the year, we grew our workforce by more than 16,700 people, improved our employee utilization, strengthened our client partnerships, and brought new services and capabilities to market."



Cognizant is forecasting first quarter 2010 revenue to be at least $935 million.

Jeff Fox, 47, will be the next president and Chief Executive Officer of Convergys. He has been a Convergys board member since February 2009, and was previously Chief Operating Officer of Alltel.



Fox succeeds David F. Dougherty, who will serve as a consultant during the transition.



During his 13 years at Alltel, Fox held a number of leadership roles including Chief Operating Officer, Group President-Shared Services and Group President-Alltel Information Services. Before joining Alltel in 1996, Fox spent 12 years in investment banking at Stephens Inc. and Merrill Lynch. He is currently a principal of The Circumference Group, which provides consulting and operations support services combined with investment capital to technology and telecommunications companies.





As part of its earnings announcement, Convergys reaffirmed its 2010 earnings guidance that was provided on Jan. 26: The solution provider continues to expect 2010 revenue of $2.6 billion.

Net sales for the fourth quarter 2009 were $1.2 billion, an increase of 2 percent compared with the fourth quarter 2008. However, annual net sales for 2009 decreased 14 percent to $4.1 billion compared with 2008.



"Closing out a year that most agree represented one of the most challenging economic climates seen in many decades, we are very pleased to report that much stronger IT demand in the fourth quarter and operating leverage across our leaner cost base resulted in fourth quarter financial results that exceeded our internal expectations," Ken Lamneck, president and chief executive officer commented in a release.

CSC saw better-than-expected earnings but flat revenue for its third quarter of 2010. The company reported new business awards of $6.8 billion for the quarter and $14.9 billion through three quarters, an increase of 17 percent from the previous year. Across the three lines of business, North American Public Sector (NPS) contributed $0.8 billion, Business Solutions and Services (BSS) reported $0.8 billion, and Managed Services Sector (MSS) closed $5.2 billion of new business.



Commenting on the results, CSC Chairman and Chief Executive Officer, Michael Laphen said, "Despite the sluggish pace of the worldwide economic recovery, our revenue held firm both sequentially and year-over-year as our margin rates and earnings continue to improve. I was particularly pleased with our new business awards of $6.8 billion, significantly above last quarter and last year. On a year-to-date basis, we are $2.2 billion ahead of last year and well positioned to meet our guidance expectations of $17 to $18 billion in new business awards."