So what differences have we seen arising from the Q2 FY2012 results and the unconvincing performances of Messrs Laphen and Mancuso at the earnings conference? Here are three differences one week has made:
· The share price has slipped again, this time by almost 25% to below $26.
· The Bloomberg index of the analysts’ target price for CSC stock over 12 months has slipped to $29.85
· CSC’s credit rating has been put on negative watch by S&P, who are not convinced by CSC’s earnings guidance for the rest of FY2012.
Things have to be quite bad for a financial writer to quote the impending departure of Mike Laphen (and hopefully his management philosophy with him) as a reason for optimism. For full details of Stephen D Simpson’s article, which describes why CSC has problems “left, right and center” can be found on:
The departure of CFO Mike Mancuso is also overdue, even ignoring his performance at the earnings call and the fact that the analysts now seem to be skeptical of anything he says. How can a company keep a CFO who has presided over 5 profit warnings/earnings misses, two major cases of intentional accounting irregularities, an SEC investigation, an Audit Committee investigation, class action lawsuits and having to inform the SEC that the company’s financial reporting could not be relied upon? And all this in a period of less than 3 years. Perhaps CSC’s Board of Directors has decided it needs to continue with Mancuso because there is no internal candidate with the skills to handle the position on an interim basis and because it feels the new CEO must be part of the selection process for a permanent CFO.
CSC also needs to signal a change in its approach to and re-establishment of its credibility with the analyst community. It should begin by appointing an experienced Head of Investor Relations with a track record of success and credibility in the role. VP of Investor Relations Bryan Brady’s problems in the area of interpersonal skills came through clearly last week, as well as his seeming not to have adequately prepared Messrs Laphen and Mancuso for the conference. When the company is in struggling, it does not help to have self-inflicted difficulties with the analyst community.