Computer Sciences Corporation
) reported second quarter 2013 earnings per share of 83 cents,
way ahead of the Zacks Consensus Estimate of 47 cents.
The company reported second quarter revenues of $3.85 billion
in the quarter, down 2.8% year over year. This happened as
a result of revenue declines across segments.
North American Public
(NPS) sector revenues were $1.04 in the quarter or approximately
35.7% of total company revenues. The segment's revenue declined
4.2% on a year-over-year basis, but remained flat on a sequential
basis. Department of Defense contracts contributed 68% of NPS
revenue, which moved down by 3% on a year-over-year basis.
Managed Services Sector
's (MSS) revenue stood at $1.58 billion, which is around 41.0% of
the total revenue generated by the company. MSS revenue declined
by 2.0% on a year-over-year basis. Business in this segment
benefited due to new client engagements and the acquisition of
AppLabs, as this acquisition contributed around $25.0 million of
revenue in the quarter, but the company is yet to realize its
full potential of the acquisition.
Business Solutions & Services
revenue was $921.0 million in the quarter, representing 23.3% of
the total company revenues. The segment revenue declined by 3.0%
on a year-over-year basis. This particular segment witnessed
iSOFT contribution of $49.0 million during the quarter and grew
by $17 million on a year-over-year basis.
The company posted operating profit of $298.0 million
rebounding from an operating loss of $75.35 million reported in
the year-ago quarter. The operating profit margin for the quarter
was 7.7%, up from loss margin of 1.9% in the year-ago quarter.
Operating margin improved by 289 basis points, excluding the
impact of a $269 million U.S. Claims settlement during the
Computer Sciences reported net income, attributable to the
company's shareholders, of $130.0 million or 83 cents per share,
compared with a loss of $2.87 billion or $18.56 in the year-ago
The company exited the quarter with $1.85 billion in cash and
cash equivalents, up from $1.0 billion reported in the previous
quarter. Long term debt balance was $2.40 billion, up from $1.46
billion in the previous quarter. Operating cash flow improved to
$444.0 million from $438.0 million in the previous year.
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
decent second quarter 2013 results, with the bottom line way
ahead of the Zacks Consensus Estimate, but revenue declining
marginally on a year-over-year basis.
The operating performance of the company improved
substantially on a year-over-year basis, whereas the new business
awards improved to a considerable extent. Intense competition in
the IT and cloud computing space from both small and big players
), and challenging macroeconomic condition in European coupled
with strained federal budgets may weigh on the stock.
The company has a Zacks #2 Rank, implying a short-term Buy
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