Computer Sciences Corporation (
reported third quarter 2012 earnings per share (
) of $1.35, way ahead of the Zacks Consensus Estimate of 57
The company reported revenues of $3.76 billion in the quarter,
down 5.8% year over year. The year-over-year decline in
revenue was primarily attributed to the reduction in the U.K.
National Health Service (
) contract. Excluding the NHS contract, total revenue stood at
$3.97 billion, reflecting an annualized decrease of 0.7%.
During the quarter, revenue from Business Solutions &
Services (BSS) was $740.0 million, down 7.7% from the year ago
period. After an adjustment of $204.0 million pertaining to the NHS
reduction, BSS revenue was $0.94 billion. North American Public
Sector (NPS) revenue was $1.38 billion, down 6.1% year over year.
Managed Service Sector (
) revenue inched up 1.0% year over year (1.1% in constant currency)
to $1.67 billion.
The company secured total new business awards of $4.1 billion
across its three lines of businesses.
North American Public
Sector (NPS) contributed $0.8 billion,
Managed Services Sector
) delivered $2.4 billion, and
Business Solutions & Services
(BSS) closed $0.9 billion worth new business.
On a year-to-date basis, new business awards were approximately
$13.0 billion; up 26% from the previous year.
The company posted operating loss margin of 37.0%, deteriorating
considerably from the operating profit margin of 6.10% in the
year-ago quarter. The margin was negatively impacted by higher cost
of services and a significant goodwill impairment charge during the
Computer Sciences reported net loss, attributable to the
company's shareholders, of $1.39 billion compared with a profit of
$243.0 million in the year-ago quarter. Reported loss per share of
$8.97 was much wider than the EPS of $1.55 in the year-ago quarter.
Excluding specific contract charge and BSS Health Impairment,
adjusted net loss was $3.97 billion or $1.35 per share.
The company exited the quarter with $898.0 million in cash and
cash equivalents, down from $978.0 million reported in the previous
quarter. CSC had a total debt balance of $2.73 billion, down from
$3.26 billion in the previous quarter.
Earlier, in December last year, the company issued a Form 8-K
regarding the NHS contract and withdrew its guidance for fiscal
year 2012 citing further clarity regarding the contract.
Computer Sciences is one of the leading players in the
information technology (
) services industry. CSC reported modest third quarter 2012
results, with revenue declining year over year but EPS exceeding
our expectation. However, we are apprehensive about the intense
competition in the IT and cloud computing space from both small and
big players such as
Accenture plc (
Hewlett-Packard Company (
Again, with the reduction in U.K. National Health Service
contract, decline in the IT spending scenario and lower European
business flow, the company is expected to generate
lower-than-expected revenues in the upcoming quarters.
The company has a Zacks #5 Rank, implying a short-term
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