Foreign currency translation had a five percentage-point negative impact on the company's revenue in the first quarter of 2001. Unisys also has completed its review of strategic alternatives for its Federal business unit. Based on weak market conditions, the company said it had decided not to divest this unit. Instead, the company is taking aggressive actions to position the business for profitable growth by de-emphasizing the sale of commodity hardware, streamlining infrastructure costs and expenses, and better integrating the unit within the overall Unisys business structure.
Customers continue to be cautious about undertaking new large-scale capital projects.
Still, we were able to manage our business to achieve our earnings target for the quarter. We are feeling the impact of the economic slowdown most heavily in our systems integration and enterprise server businesses. In technology, we are seeing weaker sales of enterprise servers across our product lines as some customers defer expenditures on new equipment until economic conditions improve. Weakness in these areas impacted our margins in the quarter due to underutilization of services delivery personnel and lower shipments of higher-margin ClearPath systems. Outsourcing and network services both delivered strong double-digit revenue growth in the quarter.