The company, which said it expects to turn a profit in the current quarter, plans to focus on high-growth areas such as outsourcing and security. It said it would take charges of about $250 million to $300 million through 2006 for the restructuring.
Unisys reported a third quarter net loss of $54.3 million, or 16 cents per share, including a pre-tax charge of $10.7 million, or 2 cents per share, related to a cash tender for 8-1/8 percent notes due in 2006.
Excluding special items, the loss was 5 cents a share, the company said, far short of its forecast for earnings per share of between 4 cents and 6 cents a share in the quarter.
Revenue declined 4 percent to $1.39 billion, falling short of analysts' average forecast, as polled by Reuters Estimates, of $1.43 billion.
The third-quarter results compared with year-ago net income of $25.2 million, or 7 cents per share. Results in 2004 included a net benefit of $8.2 million, or 2 cents per share, from a tax benefit net of a charge for cost-reduction actions.
To cut costs, Unisys plans to outsource hardware platform manufacturing over the next one to two years, expand its use of offshore capabilities, and reduce overall research and development spending by about 15 percent by 2008.
Unisys expects the restructuring to yield about $250 million of yearly cost savings, on a run-rate basis, by the end of 2007. In addition, it sees by 2008 annual revenue growth at 7-8 percent, and operating profit margins of 8-10 percent, excluding pension expense.
The company said it still looks to close out 2005 with a profitable fourth quarter.
Shares of Unisys, which are off 42 percent this year, still trade at a slight premium to the company's peers in the S&P Information Technology Services index. With a 2007 price-to-earnings ratio of 23.6, the stock is the fifth most highly valued in that index, which is composed of 35 companies.