Sunday, 18 September 2011

CSC Loses yet another Global President

If you read the CSC web site and look up the list of global management there is an interesting omission from the normal list of roles. The one that is missing is that of Corporate Vice President for HR. Until last month this role was held by Denise Peppard who seems to have vanished.  Why after just 16 months at CSC has Ms Peppard left? Why has not public statement been made about this loss of a very person at a very significant time for CSC? Did she jump? Was she pushed? Did she see the bullying and micro-management we have reported on, and gave up?

Given that earlier this month Russ Owen the President of MSS was removed from his post at CSC (see earlier post), and that Denise Peppard has ‘disappeared’ from CSC, have Stalinist type purges started at CSC?  Who is next?

As has been well established CSC has been mismanaged for years, with services being criticised across the globe, with significant figures like the Prime Minister of the United Kingdom, Mr. David Cameron, saying they will not do business with the company. As profitability is in decline, the share price collapses, and staff complain about lack of  training and investment, see WikiCSCleaks blog, it is all looking rather like Stalin and his Politburo has taken over CSC. But Stalin never had to worry about investors and shareholders. However, they seem to be rallying and are about to make their presence felt.  Watch the news on 22nd September for latest developments when the Class Action suit is filed.

Saturday, 17 September 2011

Is CSC heading for another quarter of poor results?

In removing Russ Owen from his position as President of CSC's Managed Services Sector (MSS), Mike Laphen has sent a message to the organization that he will not tolerate failure from anybody..... except from himself of course.

If Mr Owen was removed solely because of the Q1 (June 30) results,but the rest of the financial year's outlook is acceptable, why wait two months then act in September?. His removal in September suggests he has been unable to get the fiscal year outlook back on track.

Interestingly Mr Owen 'stood down' on September 16, just when CSC buiness units submit their last Q2 (Sept 30) financial forecast to Corporate headquarters. Could his fate have been sealed by his submitting a profit forecast below what Mike Laphen wanted?.

These factors suggest that  CSC's Q2 (to September 30) results for the MSS sector could well be poor, as they were in Q1. Will there be any tax credits or other one-off financial accounting credits to recover the situation this time?

The whole Outsourcing/MSS industry sector has been experiencing profitability pressure for some years now as it matures and commoditizes.  CSC has consistently cut and/or deferred planned and needed service delivery and technology investments to protect "this quarter's profit", but each time at the cost of mortgaging its future a bit more. Perhaps CSC's  disappointing results are now reflecting the consequences of this approach. Maybe this is where the rubber hits the road, or where something more unpleasant hits the fan.

Friday, 16 September 2011

Russ Owen President for Managed Services takes the blame at CSC

CSC has just announced that Russ Owen is the scapegoat for its Q1 profitability issue. See below announcement from Mike Laphen.

No doubt Owen must bear his share of the responsibility for CSC's problems, but he was in a difficult position given Mike Laphen's propensity for micro-meddling and his continual cancellation of investments in the Managed Services sector over the years.
Mike Laphen needed to divert attention from his major contribution to CSC's mess and this is what we see. .
It is unfortunate Mr Laphen felt the need to use the phrase  "Russ Owen will... step down" just to make sure everyone understands he has been fired from the job. Given Russ Owen's long service and all he has contributed to CSC, it would have been nice to have used a more elegant phrase. But elegance and dignified treatment of employees has never been something Mike Laphen has been noted for.

From: Mike Laphen - Chairman President and CEO
To: CSC Employees
Date: 16.09.2011 16:44
Subject: Leadership Change in Managed Services Sector

Today we announced that Russ Owen, who has led our Managed Services Sector (MSS), will step down as President of MSS, and assume the role of President, Strategic Account Development, effective immediately. In this capacity, Russ will focus on strengthening service performance and quality in specific accounts.

Peter Allen, in addition to leading Global Sales and Marketing, will assume the role of acting President of MSS, responsible for CSC’s Managed Services practices, including World Sourcing, Applications, Global Infrastructure and Enterprise Services, Market and Product Strategy, and Cloud and Software Services. As we advance CSC’s position in the global IT services market, MSS will play an important role by growing our applications business and ensuring service and delivery commitments and excellence.

Peter, who has also formerly served as group President of Strategy and Business Development for MSS, brings extensive expertise across the full spectrum of IT services. His intimate knowledge of our clients and the IT marketplace is a valuable asset as we bring greater innovation and competitive advantage to our accounts, and deliver on our profitability and growth goals.


Another CSC project in trouble due to poor performance

NHS IT is not CSC's only public sector project in trouble. The US Air Force plans to halt a multimillion-dollar computer modernization project being handled by CSC because of poor performance by the company,
Another one to add to CSC's growing list of issues and failures!!

Thursday, 1 September 2011

The Timeline of Events on CSC Results

As there has been so much posted over the last two years about the ups and downs of CSC financial results we have prepared the following timeline which shows that either CSC Management have let events run away with them, or worse. We'll leave the reader to judge which it is.
1. May 2010 - FY09 Q4 announcements include tax credit that improves earnings by $36m. No growth in most businesses, some growth in US. 
Note this is the year that includes $90mln of 'mistated' earnings in Nordics and is also when the two expat leaders of Nordic business are removed from their posts.

2. November 2010 - Mike Mancuso CSC Finance President announces Nordics accounting problems total $40million, are now fixed.

3. 9th Feb 2011 - Associated Press "CSC shares tumble after company cuts forecast. In that forecast Mike Laphen CEO and Chairman says "... Due to sluggish pace of new business won".

4. 12th Feb 2011 - accounting irregularities of $80mln announced.

5. 2nd May 2011 - CSC gives profits warning and restates results.

6. 11th May 2011 - David Cameron, Prime Minister of UK says in Parliament "... There no plans to sign any new contract (for NHS IT) with CSC."

7. 16th June 2011- CSC reports Nordic accounting irregularities of $91mln. CSC had previously reported these irregularities were $40 mln, then  $80mln.

8. 10th August 2011 - Mike Laphen says " a very solid business with excellent prospects", and announces Q1 FY2012 EPS of $1.18 compared to Analyst consensus of 70 cents. Without that one-time tax credit the EPS would have been only about 43 cents per share, some 27cents below expectations.
9. 10th August 2011 - Form 10-Q states that recovery of CSC balance sheet position is "probable" on settlement of dispute with US Govt

10. 24 th August 2011 - CSC reports special charge of $250mln in FY2012  on settlement of dispute with US Govt

How many more changes in financial results are likely? Given the above there are probably more to come. Only time, and investors patience will tell.