Sunday, 5 June 2011

Just when you thought things couldn't get any worse at CSC......

A class action lawsuit was filed against CSC by the law firm of Robbins, Geller Rudman & Dowd LLP on June 3. It seeks to recover damages on behalf of all purchasers of CSC common stock during the period 11 August 2010 and 25 May 2011. .

The lawsuit alleges that during this period:
1. CSC and certain of its officers and directors made false and misleading statements about the Company’s financial condition and prospects
2. CSC failed to disclose the true facts, or the facts were recklessly disregarded
3. there was no reasonable basis for the fiscal 2011 revenue, earnings, bookings and margin forecasts
4. as a result, CSC stock traded at artificially inflated prices, reaching a high of $56.54 per share.
Full details of the complaint can be found on http://eon.businesswire.com/news/eon/20110603006045/en .

The past weeks have been difficult for CSC, with two profit warnings, disappointing Q4 FY11 results, the NHS project issues, the accounting irregularities in Nordic (and Managed Services?) and then on June 1 the major strike at CSC Denmark. Now this class action law suit.

What will their next surprise be?

posted by Littlejohn

6 comments:

Anonymous said...

Yes, we need a new management in CSC. Stop the war against own employees by cutting cost and salaries and start to lead the company professionally, this Company has potentiel to revenue growth but the management is doing everything to kill the pleasure of working in a professional mannner.

CSC employee

Anonymous said...

How did CSC get into the situation of giving 2 profit warnings in one quarter, the second one a month after the end of the quarter and still failing to meet the analyst's consensus?

If CSC loses this lawsuit, it is difficult to see how the CEO Laphen or the CFO Mancuso could possibly continue at CSC.

Anonymous said...

Who would pay for damages awarded against CSC in this lawsuit?
Would the officers and directors named in the lawsuit pay from their personal fortunes, or from their professional indemnity insurance?
Or would the damages be paid for by CSC itself... meaning its shareholders?

Anonymous said...

Concerning comment #2 above.

Laphen and Mancuso should leave CSC irrespective of the outcome of the lawsuit. Their performance and lack of success have shown they are not the right people for their jobs.
They should waive all termination payments out of respect for the shareholders and employees who have suffered financially during their tenure.

Anonymous said...

Concerning these possible causes raised by Littlejohn:
1. A mistake in CSC's calculations
2. A possible restructuring charge of $100million planned in 2012.
3. More Nordic-like surprises to come to the tune of $100million.

Item 2 and 3 seems as a likely scenario, since the failed negociations with the Danish unions, clearly points to a dramatic cut in employees around spring 2012 (after March 1). For item 3 in particular, further increased spendings seems likely, since the ongoing strike (since June 1, 11) has 'forced' management to fly in around 190 consultants (independents as well as CSC colleagues from UK, India and elsewhere), to support Services jeopardized by the lawful strike that were announced March 1, 11.
So if the Nordic irregularities no cause/effect has on Management (CEO/COO) staffing, that can only mean a kind of 'grand plan' (strategic, perhaps) is prepared to 'ride the storm' the coming Fiscal Years beyond 2012-2014.

Anonymous said...

Re the last comment from Anon 09.49on June 8:

Another possibility for "missing" $100million profit is that CSC knew the class action lawsuit was coming and made a provision to cover costs, settlement etc.