Friday, 27 April 2012

CSC Lions Have Begun To Roar

There are reports coming in, today Friday 27th April, of pickets outside CSC offices in the UK. This is the first time that such action has occured in CSC UK and is obviously a precursor to more serious action. 
Following on from the strikes last year in Denmark where staff felt they were being mistreated, which led the cancellation of many lucrative government contracts, is CSC likely to lose business in the UK too?
What is the UK government going to do to ensure CSC services to NHS and other accounts are reduced?
What contingencies does CSC have in its financial plans for the inevitable cost of strike action brought about by bullying and incompetent management?
What has CSC disclosed to the analysts and what has it withheld? Does anyone know?

Help Requested to drive out bullying

This post is taken from a comment on CSCWikiLeaks blog.

If you have knowledge regarding Anne Roeser's allegations that she and other women were discriminated and/or harassed at CSC because of their gender, Ms. Roeser's attorneys would like to speak with you. Her attorneys would also like to speak with anyone who complained to CSC's Human Resources Department and failed to receive a satisfactory response.

Ms. Roeser's attorneys are:

Andrew H. Friedman
Helmer • Friedman, LLP
(310) 396-7714

Michael D. Seplow
Schonbrun DeSimone Seplow Harris Hoffman & Harrison, LLP
310) 396-0731
24 April 2012 01:56

Thursday, 19 April 2012

CSC Lions Sacrificed by Donkeys in Leadership

At the now infamous 'Waffling NHS IT' analysts conference call (see posting of 6th April)  CSC managed to get away without explaining how they were to exactly deal with downsizing and any resultant extra costs. Well what do you know? CSC is now talking about removing 300 people from the workforce just a few weeks after they said any people reductions would be dealt with by voluntary leavers and normal attrition. By saying this CSC must have either been knowingly misleading the analysts and investors, or grossly incompetent. Only time will tell which it was.

However, what we do know that along with the investors being hit in the pocket, many loyal staff who worked long hours, in some cases 60 to 70 hours a week for no extra reward, are to lose their jobs. Not surprisingly the employees are demonstrating in public about this. Read it here from The Register. Meanwhile the leadership who created this mess are still in place drawing large salaries, bonuses and perks. Indeed, they seem to be untouchable. Thus it seems like the scenario from the First World war when millions of men were sent ‘over the top’ to be slaughtered in their millions while senior officers sat in nice safe luxurious chateaus miles from the front being wined and dined. At that time ‘Lions Led By Donkeys’ was a term being used in the press. Although people are not dying we think this term is very appropriate for CSC.

One final comment of the redundancies: If 300 people at £30,000 each are to leave the bill to CSC is at least £9,000,000. This has to be added to the contract losses. Have they been booked yet? Note that as a result CSC will have thousands of square feet of empty offices and data centres to get rid of. Are these costs included in latest forecasts?

The other latest news about CSC in the UK is they have been granted a contract with Government’s Ministry of Defence. This is happening even though Prime Minister David Cameron said in Parliament and on TV for all to hear that CSC was not to be granted any new contracts as the company was not to be trusted. But now we read that CSC is to be awarded with defence personnel records management. Thankfully Mr Eric Bacon MP who sits on the Public Accounts Committee in Parliament is asking for this deal to be called in for review. But perhaps this new contract is a quid quo pro for loss of NHS. Let us wish Mr Bacon MP well in getting this deal quashed.

Other news of this contract, none of it is good, can be found here:

More Bullying reported at CSC

In our post commenting on Mike Lawrie's announcements we touched on the need to deal with the bullies at HQ. It seems these people may still be thriving as CSC is being sued by one ex-executive, a white female, for allowing bullying to occur resulting in her losing her job.

This has come to light via the WikiCSCleaks blog.

The headline in the press is:

Computer Sciences Corporation Sued for Pattern and Practice Gender Discrimination and Harassment
Former High Level Executive Alleges That CSC Fired Her For Complaining About Gender Discrimination and Harassment

Sunday, 15 April 2012

CSC's NHS IT Partner Directors On Trial

There is an old saying along the lines of "You judge someones character by the company they keep". CSC has been keeping very close company with iSoft and have got so close that they bought the company.
iSoft's business is in providing software for the healthcare sector and it is used by CSC as the backbone for multi-billion pound sterling NPfIT sponsored by the UK National Health Service. Much has been written about why after nearly ten years of trying CSC cannot get this software to work and about the impact this failure has had and continues to have on CSC. Perhaps part of the answer lies in a criminal trial being held at Southwark Crown Court in London England.
The Manchester Evening News reported on 13th April:

Former directors of healthcare software firm iSoft conspired to give false accounts of how the company was performing to boost their own personal wealth, a court heard.
The Manchester business's former chief executive Timothy Whiston, 44, of Lymm, and former directors Stephen Graham, 48, from Knutsford, and John Whelan, 45, of Cheadle Hulme, appeared in the dock as they went on trial at London's Southwark Crown Court.
The trio all deny a single charge of conspiring together to make statements, promises or false acts about iSoft which they knew to be false, misleading or deceptive.
The offences are alleged to have been carried out between October 2003 and July 2006.
The firm's former chairman Patrick Cryne, 61, now owner of Barnsley Football Club will be tried separately due to ill health.
Jurors were told there was a "huge discrepancy" between the iSoft accounts that were published and what the state of the firm's finances were in reality.
Beginning his opening of the case, prosecutor Richard Latham QC said Cryne and Graham became multi-millionaires from the alleged crime, while the other two defendants also became rich.
All of them received substantial annual bonuses on top of their salaries.
He told jurors that as a public limited company the firm, which specialises in providing software for health service providers, had to publish details of its accounts twice yearly.
He said: "If a company mis-states its accounts, it has very serious consequences for us all.
"This is not about a slight slip-up. It's not about a marginal error of no real consequence. It's precisely the opposite. This case involves a continuing deliberate deception.”
He said the defendants misled the company's non-executive directors, its audit committee and its external auditors, and may have corrupted other more junior members of staff. The trial continues.

The big questions are;
 who in CSC decided iSoft was an appropriate company to do business with?
 why does CSC persist in championing this product when it is obviously not fit for purpose?

One final point. These problems with iSoft are nothing new as these posts1. and 2. from three years ago reported concerns about iSoft financial reports and the software.

Friday, 13 April 2012

CSC’s CEO Mike Lawrie breaks with tradition, tells it straight and promises senior management accountability!

CSC held a conference call on 11 April to update the analyst community on expectations for its results for the quarter to 31 March 2012 (its Q4 FY12). CEO Mike Lawrie also talked about his assessment of CSC’s situation and his plans to turn the company round.

CSC’s expected Q4 FY12 results will be very poor and significantly below analysts’ expectations.  Once again CSC did its routine of saying what the results would have been “excluding this item and without that impact”. 

The earnings “excluding this item and excluding that impact” will be between $0.19c and $0.21c per share compared to Wall Street expectations of around $0.97c per share.  The $0.19c to $0.21c earnings numbers exclude the previously announced NHS charge, goodwill impairments, the US claims settlement, iSOFT dilution, and a fourth quarter restructuring charge.

All these “excluded” items are a direct result of prior CSC management actions, decisions and incompetence. So excluding them is just an excuse. The full picture is that CSC expects a loss of $0.92c to $0.94c per share for Q4 FY12 which means a loss of about $27.30 per share for the whole of FY12.   Revenue for Q4 FY12 will be around $4.1 billion, down about 3 % from the same quarter of FY11. As a comparison, Accenture last month announced revenue growth of 13%.

The extent of the damage ex-CEO Mike Laphen has inflicted on CSC in his 5 years of mismanagement is hard to believe.  It is equally unbelievable that CSC’s Board of Directors, meaning its non-executive directors, just sat back, kept quiet, collected their directors’ fees, paid Laphen massive amounts and then allowed him to come close to destroying the company.

So where is the good news in all this?

The first good sign was that while CSC shares dropped almost 9% immediately when the markets saw the numbers, they recovered 6% during the day as they reflected on what Mike Lawrie had said. The shares closed only 2.4% down at the end of the day.  Mike Lawrie’s message was vastly different from the wild unfounded optimism and promises that Laphen consistently delivered.  It was also different from the content-free waffle CSC served up earlier in the week when updating the analysts on the NHS (lack of) progress.  

“We have profitability issues driven mostly by underperforming projects, NHS, which has been well-chronicled over the last several quarters, and we have some business units that are not performing at the level that they need to perform at,” said Lawrie.  “There will be some restructuring as we begin to align our costs to our revenue. We’re going to implement a leaner, more efficient operating model with clear lines of accountability so that we can get more lined up to deliver shareholder value and needless to say, there will be some leadership changes as we move forward as well,”

 The company said it had booked all costs from the U.K. health contract write-down and had posted “substantial” restructuring charges for job cuts mainly in its Nordic and U.K. regions. Mike Lawrie added that there may be further incremental restructuring costs as contracts are adjusted and renegotiated and that the company places more emphasis on profitability than revenue growth. This shows that Mike Lawrie recognizes that Laphen’s promised revenue growth was  nothing more than smoke and that today’s CSC is incapable of revenue growth.  

Fuller details of the call transcript are given on:

Substantial restructuring in UK and Nordic is regrettable but unavoidable given CSC’s situation. But hopefully the employees will not be alone is bearing the pain this time round. Finally it appears that the top executives will not escape the consequences of their mismanagement this time.  Mike Lawrie has said he will introduce senior management accountability into CSC, something lacking over the past 5 years.   Let’s hope this is accompanied by an end to the practice of granting massive termination pay-outs to failed executives who leave.  These failed executives should be given just the legal minimum pay-out as a message that there are no more rewards for management failure.

We urge Mike Lawrie to restructure CSC intelligently by cutting out activities and identifying tasks that will be stopped, rather than just cutting heads once again and expecting the remaining employees to do ever more and more. There is tremendous scope for work and management reduction when one looks at the mass of red tape, bureaucracy, internal arguments about who gets the revenue, review packs, duplication of work and pointless administration that CSC has built up over the years.  The irony is that CSC offers “business transformation services” to its customers while it has proved incapable of transforming itself. 

Mike Lawrie has made a good start in the eyes of most CSC employees. His message to them may be tough, but he is telling it like it is, a welcome change from the bullshit and management silence that employees have been given over the past years.  Lawrie must put his words about senior executive accountability into action, including accountability of executives still with CSC for the years of mismanagement that has led to the sorry mess the company has become in UK and Nordic.

Mike Lawrie needs to ensure CSC keeps its real leaders, its good people who are making a genuine contribution and those who had the courage to speak out and try to address CSC’s real problems in the past.  He needs to terminate the management non-performers, the content-free self-publicists, petty bureaucrats, sycophants and bullies, some of whom are in HQ, who thrived during Mike Laphen’s reign while avoiding accountability for their non-performance.

Mike Lawrie told it straight on this conference call. His challenge is to show that his actions to address the shortcomings and his pruning of non-performing senior executives will be equally straight.  If he can demonstrate this, he has a good chance of re-establishing CSC’s credibility with the analyst community and of ensuring the support of the employees. Time will tell if his actions are as good as his words.

Friday, 6 April 2012

CSC waffles through its analyst call on NHS progress

CSC held a conference call this week to update the analyst community on its “progress” in negotiations with the UK Government surrounding the failed NHS project.

Mike Lawrie may have replaced Mike Laphen as CEO, but his new broom has not had time to sweep  away all of CSC’s bad habits of the past. European President Guy Hains gave a masterclass in content-free waffling using intelligent-sounding buzz words to paint a rosy picture which does not seem supported by facts .

Mark Ballard of Computerweekly has written an excellent overview of the call and its implications, per the link below.

Some analysts raised questions about the financial situation, which CSC declined to answer.   Jason Kupferberg of Jeffries & Company asked if we would see some of the $1.5billion written-off in December 2011 coming back to profit in future quarters.  He was told the question was out-of-order, but it is what we are all interested in knowing.

A full transcript of the call, plus the analysts’ questions, can be found on SeekingAlpha

So we’ll just have to wait a bit longer to find out what is really going on in the NHS project.