Thursday, 11 August 2011

At CSC - "Come in N° 491, your time is up"

With many of its competitors reporting strong revenue growth, we wondered how CSC's Q1 FY2012 results would come in.
Well, they were reported yesterday and were just woeful, leading to an immediate 15% drop in its share price to $27.
Compared to the same quarter of last year, revenue was flat, new business wins were down, pre-tax margin was substantially reduced. Earnings per Share (EPS) were up, but only because of a large tax credit. Without this credit EPS would have been 27 cents below the Wall Street analysts' expectations. Highlights are given on http://blogs.forbes.com/ericsavitz/?p=9595 
It seems that CSC can only continue to meet or get close to financial targets through the support of one-off items like tax credits and 'charges' or whatever. This indicates that the underlying business is indeed has not been performing for a long time now. The shareholders seem to be very patient with CSC leadership and are tolerating third rate performance. Why? 

Watch for further analysis of these results as we dig into the suporting detail.






Note: The eagle eyed amongst you will have noticed the reference to CSC's 491st position on the Dow Jones, worst performing companies table. see previous post on this subject. Given the latest announcements this position has almost certainly slipped even further.

Compare CSC to its opposition:


Valuation
Company name Price Change Chg % d | m | y Mkt Cap
CSC Computer Sciences Corp. 28.24 -3.73 -11.67% 4.38B
IBM Intl. Business Machine... 162.54 -8.07 -4.73% 194.12B
CTSH Cognizant Tech. Soluti... 60.83 -4.03 -6.21% 18.47B
HPQ Hewlett-Packard Company 29.86 -1.67 -5.30% 61.93B
SYNT Syntel, Inc. 47.71 -1.84 -3.71% 1.99B
WYY WidePoint Corporation 0.670 -0.020 -2.90% 42.16M
DRCO Dynamics Research Corp. 9.58 -0.61 -5.99% 96.79M
UIS Unisys Corporation 16.88 -0.88 -4.95% 725.43M
NCIT NCI, INC. 14.24 -0.98 -6.44% 194.81M
ZANE Zanett, Inc. 0.520 +0.020 4.00% 4.82M
DST DST Systems, Inc. 43.84 -1.95 -4.26% 2.04B

2 comments:

Anonymous said...

These results would beggar belief, were it not for knowing that it is Mike Laphen who is 'in charge'.

In a moment of severe global economic difficulties an outsourcer ought to be winning business and lots of it.

Anonymous said...

$38million to get rid of Laphen - its starting to look like a good business proposition.