The cuts represent 3,8% of the company's staff of 37 000. Unisys expects to save around $70m a year as a result of the move.

However, the changes will result in a one-time, after-tax charge of around $63m in the third quarter of 2004, Unisys says.

At the same time, Unisys announced that it has netted a refund of about $30m in settlement of US tax audit issues dating from the mid-1980s.

The settlement means the company can adjust its reserves for tax liabilities, allowing it to record an after-tax benefit of around $70m in the third quarter, it says.

Unisys still expects to meet its previous guidance for the third quarter, it said Wednesday.

In July, it predicted that third quarter revenue will remain stable compared to last year's total of $1,45bn, albeit with a slight decline in revenue from its technology business sector, which accounts for around one-sixth of total revenue.

Excluding the impact of pension accounting and the charges announced Wednesday, Unisys expects to report earnings per share for the third quarter of between $0,08 and $0,12.

In the third quarter of 2003, it reported earnings per share of $0,17. The company will release final third quarter earnings on 14 October.