Unisys Gets Order from IRS (UIS)

Recently, Unisys (UIS), a worldwide information technology company, received the Enterprise Storage Acquisition task order from the Internal Revenue Service (IRS). As per the order, Unisys will provide private cloud-based storage for the agency's information records.

The task order, with a one year base period and nine one-year options, have the potential worth $139 million over 10 years if options are exercised. The worth was estimated by including pricing for each year based on the IRS's estimate of its storage requirements.

Initially, Unisys intends to acquire storage assets, which is now owned and managed by IRS. Further, the company will manage more than 7.5 petabytes of storage space, which is currently in multiple IRS data centers and facilities.

Consequently, Unisys will plan, build, deploy and maintain a new IRS storage environment. Unisys will also transition those assets to a private cloud-based storage-as-a-service model, wherein the agency will be required to pay for storage capacity as needed.

The IRS will pay only for the amount of storage it needs, and shall not purchase storage equipment, which would be necessary to meet its peak demands.

Last week, Unisys reported second-quarter results, ahead of the Zacks Consensus Estimate. Unisys generated revenues of $921 million in the second quarter of 2012, down 2% from the year-ago quarter and 0.8% sequentially.

Unisys posted a net income (including pension expenses) of $46.6 million or 99 cents per diluted share in the second quarter of 2012 compared with a net loss (including debt reduction charge, post-tax charge and pension charge) of $11.6 million or 27 cents per diluted share in the year-ago quarter, and a net income (including a charge related to debt reduction and pension expense) of $13.4 million or 30 cents per diluted share in the first quarter of 2012.

Excluding these charges and expenses, net income for the quarter came in at $1.41 per diluted share versus $1.07 per diluted share in the year-earlier quarter and 97 cents per diluted share in the previous quarter.

The macro-economic conditions continue to be challenging for Unisys. We have a Neutral recommendation on the stock. The stock currently carries a Zacks #1 Rank, which translates into a short-term rating of Strong Buy.