This is the last set of quarterly results Unisys under the leadership of Ed Coleman – and it has been a last hurrah:

• Revenues were $883, up 11% y/y, up 10% in constant currency: the strongest quarter of growth for many years at Unisys
• Operating income was $77m, an operating margin of 8.7%, up 570 bps from a margin of 3.0% in Q3 2013.

Significantly, the topline growth came from both the services and technology businesses.

• Services $763m (+6%, +4% in CC). Significantly, Unisys achieved growth in its projects business, where it has been struggling for some time, as well as its outsourcing businesses. And it points to a a good pipeline of project opportunities for Q4
• Technology $120m (+66%, +65% in CC).

Not to put too fine a point on it, this level of growth and margin improvement is one that the likes of HP and IBM (vendors that also have server, software, and services businesses) would envy at the moment.

Growth was, of course, boosted by the Pennsylvania data center consolidation award announced in July (see here: http://research.nelson-hall.com/search/?avpage-views=article&searchid=38516&id=203302&fv=2), but Unisys also saw growth in its commercial and financial services sector units.

During his tenure, Coleman has achieved a level of turnaround at Unisys that back in 2008 few believed possible. The company was burdened with a huge pension obligation and had been poorly managed for years. He inherited a previous turnaround program that had failed to realize a sustained improvement in profitability to an acceptable degree of positive operating margin. Investors and potential clients were concerned about Unisys’ financial stability, with negative FCF and over $300m level of debt maturing in March 2010. Coleman proved effective in taking out costs. He brought in focus and clarity to a company that had lost focus, that was losing money and whose credibility had been dented by the loss of the TSA contract. And he streamlined what had become a bloated organizational structure.

The business is now stable, and there have also been a number of recent developments, in technology (e.g. Stealth for cyber security, Forward!, the Choreographer cloud management platform), in channel initiatives, and in its end-user computing and service desk offerings. Of course, the level of investment has been perforce limited.

Coleman leaves Unisys in far better shape than it has been for many years.  

Clearly investors are now looking for a new CEO for the next stage of the company's journey. However, we cannot escape the fact that Unisys remains dependent on an area of IT services (e.g. its end-user computing service desk and field force operations) that has essentially been commoditized, and on a sector (federal) that is currently a very difficult arena to play in. A new CEO can’t change either of those. However, Unisys is well positioned in the U.S. government sector (both federal and also state levels) cloud market, for IaaS. Pennsylvania’s last mile data center consolidation effort, for example, will be one the largest cloud-based, on-demand IT computing implementations by a U.S. state government. There may be other wins of this scale for Unisys over the next few years. 

What should we expect to see from Unisys under its next CEO? One obvious area would be further work on partnerships, building on work that has been started with the likes of SAP (Unisys recently announced two agreements with SAP: one that enables it to integrate SAP Hana on the Forward! platform, the other to offer a SAP Hana hosting through a Unisys or a partner-managed datacenter, to the U.S. federal government).

It will be interesting to see whether the next CEO will do anything fundamentally different beyond what has already been put in place.