CSC Profit Falls on Contract Charge

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Computer Sciences Corp. said second-quarter profit fell as it took a $33.1-million charge related to the loss of business with Nortel Networks.


The El Segundo-based computer-services company reported second-quarter net income of $99.5 million (53 cents per share) for the 12 weeks ended Sept. 30, compared with $130.5 million (68 cents) for the like period a year earlier. Revenue rose 5.3 percent to $3.6 billion.


Second-quarter earnings included a charge related to the canceled Nortel Networks contract of $33.1 million (18 cents per share). Excluding the charge, the company reported earnings of 71 cents per share.


Analysts had expected earnings of 68 cents per share on revenue of $3.63 billion.


The drivers of revenue growth during the quarter were CSC’s U.S. commercial activities and federal government operations, led by lucrative outsourcing agreements and consulting activities as well as gains in its Department of Defense- related business and the company’s operations in Australia and Asia.


Its global commercial revenue rose 4.1 percent to $2.3 billion, while U.S. commercial revenue jumped 11.3 percent to $1 billion. CSC reported federal government revenue of $1.2 billion, up 7.5 percent from the year-prior period, while its Department of Defense- related business increased 19.9 percent to $835.4 million.


The company expects third-quarter earnings in the mid-80 cent per share range on revenue of around $3.8 billion. Full-year earnings are expected to be $3.25 to $3.30 per share on revenue of approximately $15 billion, which is at the lower end of previous guidance due to a $200 million to $300 million loss related to currency fluctuation.


CSC’s second-quarter results filing didn’t mention reports that Lockheed Martin Corp. and three private-equity firms are considering a buyout of the company.

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