CSC Reports $1.39B Loss on Revenue Down 5.8 Percent
Results for the company's third fiscal quarter were hit by a $1.49B charge related to a cancelled UK government health IT contract
Wed, February 08, 2012
IDG News Service — Computer Sciences Corp. reported a US$1.39 billion loss for its third fiscal quarter, with revenue down 5.8 percent year on year. Performance was dragged down by a $1.49 billion charge related to the U.K. government's cancellation of a health IT contract, it said Wednesday.
The company posted a profit of $242 million in the same quarter last year. CSC said it would have made a profit on steady revenue in the most recent quarter if it weren't for the charge, which it announced in December. Two of CSC's last four quarters have been blighted by exceptional charges, totaling around a quarter's worth of revenue.
Revenue for the third fiscal quarter totaled $3.76 billion, down 5.8 percent from $4 billion a year earlier. The managed services sector continued to contribute the largest share of that, around 44 percent, with the North American public sector contributing 37 percent and business solutions and services 20 percent.
New business awards during the quarter totaled $4.1 billion, and CSC expressed optimism about its ability to capture new business.
The company also named a new CEO, Mike Lawrie, to replace Michael Laphen, who resigned in October.
During a conference call later Wednesday, CSC CFO Michael Mancuso announced that he, too, planned to step down, but would stay on until May in order to assure a smooth transition. Mancuso characterized the move as something long in the works, saying that after taking the job in 2008 he always intended to stay for only three to four years.
Meanwhile, Lawrie's hiring "bodes well for the future of the company," Mancuso said.
Lawrie's "in-depth experience with IBM" as well as his current role as CEO of IT services firm Misys means "he brings the depth and breadth that we were looking for to move into this slot," Laphen said. "CSC has had challenges recently but we have a strong business supported by world-class customers."
There was bad news Wednesday for CSC's Danish business unit: Its biggest private-sector customer there, mobile telecommunications operator TDC, has chosen the Indian company Tata Consultancy Services run its IT services, Computerworld Denmark reported Wednesday.
The company declined to comment further on the outlook for future quarters pending the outcome of negotiations with the U.K. government over the health IT contract. In December, CSC estimated its investment to date in the contract for the U.K. National Health Service at around $1.5 billion, and said it could end up assuming additional costs, pending the outcome of the negotiations.
