As Unisys Corp. prepares to make deep staffing cuts, the Blue Bell, Pa.-based company’s 1,000-employee technology division in Mission Viejo could be in for a hit.
“If we saw some pruning going on, I would expect a little more of the pruning to go on with the hardware business,” said Robertson Stephens analyst Joseph Vafi.
Unisys’ hardware business, which includes servers and other products, falls under the OC-based technology division. The division’s third-quarter revenue fell 21% from last year, with management citing a sharp drop in orders. Sales of one of the division’s most popular product lines all but dried up following the Sept. 11 attacks, the company said.
Business has declined for many computer companies as consumers and corporations have put off purchases. Many customers are waiting to see how the economy plays out before opting to purchase big-ticket technology products, analysts say.
Unisys’ technology division is based in Mission Viejo.
“That facility is very important to us,” said company spokesman Marty Krempasky.
Unisys executives are trying to ease the situation by offering employees early retirement packages, which are set to be distributed this week. Unisys has been mum on who would be offered the packages, but said they would be made available across the company. If Unisys doesn’t receive enough volunteers, it will begin laying off people.
Any local cutbacks would be part of a companywide restructuring aimed at trimming 3,000 positions, or 8% of Unisys’ workforce. It comes just after Unisys reported a profit of $20.9 million for the September quarter, a 50% decline from a year ago. Sales were off 5%, to $1.38 billion.
If Unisys cuts locally, it will be the first time in several years that the company has let OC workers go. Unisys has retained 1,000 employees in South County since 1997, when it pared down from 1,500 locally after closing a Rancho Santa Margarita plant.
Unisys also would join a growing list of companies that have either scaled back or pulled operations entirely out of OC. Several months ago, Texas Instruments Inc. left OC, moving 250 jobs to its headquarters in Dallas. Toshiba America Information Systems Inc. pulled its laptop computer assembly operation out of Irvine, eliminating 500 local jobs.
Unisys’ South County operations could be spared, according to one analyst, who says that the company’s services division, which is based on the East Coast, could be hit.
“I would say that if you’re going to choose between a technology engineer who’s working and a consultant who’s sitting around, you’d choose the consultant,” said A.G. Edwards Inc. analyst Gregory Gieber.
Still, as Unisys’ technology business slows down, services have been running at about 75% of the company’s sales and are posting healthy 20.8% gross margins, which Unisys indicated will continue. “Management also expressed confidence that outsourcing would continue to grow at a double-digit clip through 2002 as businesses continue to utilize (outsourcing) for cost savings,” Vafi said. n
