LAWA Awards Unisys Contract

Unisys Corporation (UIS - Analyst Report) was recently awarded a contract modification by The Los Angeles World Airports (LAWA) to upgrade its access control and alarm monitoring system which is used to identify the 45,000 airport employees, contractors, police and others who work at the organization's three airports.

LAWA oversees airport operations for the city of Los Angeles. Earlier, LAWA awarded a contract to Unisys to operate and maintain the access control and alarm monitoring system in 2009.

LAWA currently plans to move to a biometrics-based identification system wherein workers at the airports will be identified based on personal attributes such as fingerprints.

Meanwhile, the modification plan is estimated to be worth $10.3 million over one year. Under the plan, Unisys will provide services such as site assessments, engineering, installation and training on the system's new features. Unisys will also upgrade LAWA's network infrastructure to provide greater levels of reliability and security.

The new modification will help Unisys replace the airports' existing magnetic stripe card readers with a contactless system, which should make it difficult for non-authorized individuals to access secure areas. The new contactless system is also estimated to save money by reducing the wear on cards and readers associated with magnetic stripe systems.

Earlier, Unisys Corporation reported revenues of $1.02 billion in the third quarter of 2011, up 6% year over year. Foreign currency fluctuations had a six percentage-point positive impact on revenue in the quarter.

Total revenues grew 6% despite a decline in the company’s U.S. federal business. Excluding the U.S. Federal business, overall revenue grew 14% year over year. Management stated that strong ClearPath sales, continued growth in the non-U.S. Federal IT outsourcing business, and higher sales of industry solutions within the system integration business more than offset the decline in the U.S. Federal business where market conditions remain challenging.

Technology revenues grew 36% from the year-ago quarter driven by significantly higher sales of ClearPath software and servers.

Gross margin increased to 27.9% from 24.7% in the year-ago quarter and 22.8% in the previous quarter primarily reflecting higher sales of ClearPath software and servers and a more profitable mix of services revenue. Services gross profit margin improved to 21.6% from 20.6% a year ago.

Operating margin improved to 11.1% from 7.9% in the year-ago quarter. Services operating margin improved to 8.7% from 7.1% a year ago.

Net income came in at $78.6 million or $1.63 per share in the third quarter compared with a net loss of $11.6 million or $0.27 in the previous quarter and a net income of $28.3 million or $0.65 in the year-ago quarter. The results easily beat the Zacks Consensus Estimate of $0.70.

We continue to maintain an Underperform recommendation on Unisys. However, we have a Zacks #3 Rank on the stock which translates into a short-term rating of Hold.

Read the full analyst report on UIS