Monday, December 29, 2014

Unisys builds cash as it trims debt

It's taken a long time for the Blue Bell information-services firm to reach the point where it has more cash than debt on its books.

Unisys builds cash as it trims debt

It’s been a long time since Unisys Corp. could say that it had more cash on its books than it owed.

But that was the case as 2010 ended. The Blue Bell information-services provider had cash of $828 million and debt of $824 million. The previous year, Unisys had cash of $648 million and debt of $912 million.

That factoid had escaped my attention when Unisys announced its 2010 financial results Feb. 1. Chief executive J. Edward Coleman made sure to highlight it during a conference call with financial analysts.

I was fixated on how the company’s revenue continued its two-decade-long slide, finishing 2010 at $4.02 billion, down from $4.39 billion a year earlier. This decline isn’t something cyclical. Unisys’ revenues were $6.89 billion in 2000 and $10.11 billion in 1990.

Another constant through the years has been Unisys’ struggle to manage its debt load. On that conference call, Coleman signaled that Unisys intended to reduce its debt by 75 percent, or $625 million, by the end of 2013.

On Tuesday, the company got busy doing just that by announcing a tender offer for up to $220 million of its outstanding senior secured notes. It would fund that effort with existing cash and the $225 million raised from a public offering of 2.25 million shares of convertible preferred stock.

Two credit-rating agencies were prompted to put Unisys on their watch lists, but for positive reasons, because the company would be reducing its leverage. Fitch Ratings Inc. said that Unisys could wind up cutting its debt to $467 million from those two moves.

As beneficial as that additional breathing room would be for Unisys, Standard & Poor’s Ratings Services tempered expectations for how much an upgrade it might produce. “Ongoing revenue declines will likely limit an upgrade to one notch,” it said.

On a day when trading in equities was influenced by the uprising in Libya, Unisys shares fell $3.57, or 8.7 percent, to close at $37.43.

Start ’Em Up

The knee-jerk knock on Philadelphia business is that it’s not entrepreneurial.

That’s not true, of course. Every metropolitan region creates businesses. But I hear the envy that wells up when comparisons inevitably are made between this region and the bubbling start-up cauldrons of Silicon Valley or Boston.

We don’t bubble, we simmer, and sometimes we get steamed when Philadelphia seems left out of the conversation about how to jumpstart business formation and encourage growth.

The Obama administration’s Startup America initiative, fresh off a visit to Cleveland on Tuesday, announced the eight other cities where it will hold “Reducing Barriers” roundtables. Organizers of those events say they want to hear directly from businesspeople about their ideas to cut outdated or “overly burdensome” regulations.

I would have thought Philadelphia to be a perfect place to talk about such barriers, but no such luck. The first roundtable rolls into Durham, N.C., on March 3, and the second will be held between sound checks at the South by Southwest festival in Austin, Texas, on March 12.

The rest of the dates have not been set, but the following areas have been chosen: Boston; Silicon Valley; Atlanta; Minneapolis; Boulder, Colo.; and our sister city to the west, Pittsburgh.

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
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