Computer Sciences Corporation
) reported first quarter 2013 earnings per share of 43 cents,
beating the Zacks Consensus EPS Estimate of 20 cents.
The company reported revenues of $3.96 billion in the quarter,
down 2.0% year over year. Poor performance of the North
American Public Sector (NPS) primarily dragged the revenues
During the quarter, NPS' revenue declined 8.0% year on year to
$1.37 billion, owing to the cessation of three Defense contracts.
Meanwhile, the Managed Services Sector (MSS) revenue inched up 1.0%
from the year-ago quarter to $1.64 billion and Business Solutions
& Services (BSS) revenue improved 2.0% year on year to $0.99
billion. New Business awards were $4.0 billion in the quarter.
The company posted operating profit of $123.0 million compared
with a profit of $126.0 million reported in the year-ago quarter.
The operating profit margin for the quarter was 3.10%,
deteriorating considerably from 3.12% in the year-ago quarter. The
margin was negatively impacted by higher cost of services, higher
selling general & administrative expense and higher interest
Computer Sciences reported net income, attributable to the
company's shareholders, of $67.0 million or 43 cents per share,
compared with a profit of $183.0 million or $1.17 in the year-ago
The company exited the quarter with $1.0 billion in cash and
cash equivalents, down from $1.09 billion reported in the previous
quarter. Long term debt balance was $1.46 billion, down from $1.49
billion in the previous quarter.
The company is still evaluating the impact of the turnaround
initiatives and is expected to issue fiscal 2013 guidance later,
most probably during the next earnings call.
Computer Sciences is one of the leading players in the
information technology (IT) services industry. CSC reported modest
first quarter 2013 result, with the bottom line exceeding the Zacks
Consensus Estimate, but revenue declining on a year-over-year
basis. The company displayed a lackluster operating performance,
whereas the new business awards improved meaningfully.
Intense competition in the IT and cloud computing space from
both small and big players such as
), its European exposure and strained federal budgets coupled with
the troubled NHS contract prompt our bearish outlook on the
Currently, CSC holds a Zacks #5 Rank (implying a short-term
Strong Sell rating).
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