Monday, 10 March 2014

CSC takeover reports

“The fly on the wall” reports that.......

“Shares of CSC have been volatile after Danish newspaper Borsen reported (on March 7) that the information technology company is in talks regarding a potential takeover with an Indian IT company. CSC declined to comment on the story, which noted the takeover could be for all or parts of CSC, Borsen added. Shares of CSC are up 55c to $63.13 after rallying over $64.00 shortly after the opening.”



Before the departure of Van B Honeycutt from his position as President and CEO in 2006, it was rumored that CSC’s Board had turned down offers of US$60 per share for the company; that they were looking at get at least US$65.   The company’s performance, outlook and share price subsequently collapsed during the tenure of Honeycutt’s successor, Michael W Laphen.  

If current CEO Michael Lawrie can get above US$65 per share for the sale of CSC, he will be viewed as a hero by many long-term shareholders, who will not care how many tens or hundreds of millions of dollars he will pocket for this achievement. They will just recall the dark days around the time of Laphen’s departure with the share price dipping below US$25.
Of course, it will be a totally different story for many CSC employees if the company is actually sold.   They will probably have much less to feel good about.


But a rumor does not constitute a transaction and this could turn out to be just an unsubstantiated rumor. But many people think that Michael Lawrie will find it increasingly difficult to sustain CSC’s profitability level.  If these concerns are founded, Mr Lawrie could be feeling some pressure to get a sale concluded soon.

66 comments:

Anonymous said...

Rumor is that this is bogus. Then again, if you're playing poker, you maintain the poker face.

Anonymous said...

I can't see the US government allowing any non-US company to take over CSC. CSC has too many contracts in the defense and spooks field to allow foreigners in.
But you never know. The company may be split with Federal Sector being hived off to someone like HP and the rest going to the highest bidder.
It certainly looks like the current management are preparing the company for sale as they hire in help on short term bonus plans etc and slash every cost in sight.

Anonymous said...

In addition to the US Govt business referred to in the 14:22, there are the "Change of Control" provisions in multi-year management contracts. Any potential buyers of CSC will want to ensure that the key customers will not use terminate under these provisions. All good to deter hostile takeover bids, but not helpful if you want a quick agreed and friendly sale.
If there is any substance behind the sale story, it could last for quite some time.

Anonymous said...

Hard to say really, but the reaction on Wall Street suggests that this was believed for a very short time on Friday and since then nothing.

Seem to remember CSC isn't liked much in Denmark and they jump at the chance to twist the knife...

Anonymous said...

CSC share price is still above $62. Its business fundamentals do not warrant anything above $50, so maybe some people still believe the story.

Anonymous said...

So india will become the master... will be over all regions like a rash. Then will get rid people at all levels and replace.. another cull just in time for christmas 2014....

Anonymous said...

1. Buying rumor means CSC share price goes up
2. Near the end of the company financial year when management and staff are accessed
3. Higher echelon are accessed on and have incentives linked to share price
Color me shocked ........

Anonymous said...

Fuck csc. Worked long enough for this bunch of tossers to be stabbed in back yet again. Sdm account exec pms hr regional managers all nothing but parasites. I hate this company.

Anonymous said...

The following was sent last week by Jim Smith, 2nd in Command to Lawrie to ALL employees - not just management. This will be the policy across the company (including India no less):

"People are our most important asset, and we need to invest our finite resources in people who are delivering strong results. An employee who far exceeds performance goals deserves, and should receive, a larger compensation award. Employees who work hard, but whose efforts have not produced optimal results for the company need and deserve accurate feedback on areas where their effort is not translating into results. We need a culture where employees are rewarded for results, not just effort.

Calibrating Performance*
We must also evaluate performance and results relative to team members and peers. Not all employees should receive an “exceeds expectations” rating. Based on benchmarking data relative to employee rankings of companies like CSC, we should expect a ratings distribution of:

· Exceeds Expectations: 15%
· Meets Expectations: 45%
· Partially Meets Expectations: 30%
· Does Not Meet Expectations: 10%

The above distribution reflects our competitive environment, and we will revisit this distribution each year. Overall performance ratings for employees should be measured against this distribution as part of the overall appraisal quality evaluation."

My translation - Management doesn't care how hard you work. If you don't deliver results, as defined and interpreted by your trusted Management, you are gone. Our pet employees will receive nice bonuses and raises. The rest of you can suck it. Oh - and by the way - regardless of the results you people deliver, we will be sacking 10% of you every year. Cheers bitches!!

Anonymous said...

If 40% of your company partially meets or does not meet expectations, then something is seriously wrong with the company. That basically means almost half of the company is underperforming.

Anonymous said...

In UK that directive is being ignored. We are not USA monkeys.

Anonymous said...

How does the UK intend to avoid the USA dictates?

Anonymous said...

This is an excerpt of a Vanity Fair article by Kurt Eichenwald about cultural problems at Microsoft....

At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee
I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers
of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with
certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers,
then good performers, then average, then below average, then poor. For that reason, executives said, a lot of Microsoft superstars did
everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings.
And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash
or were shown the door. "The behavior this engenders, people do everything they can to stay out of the bottom bucket,” one Microsoft engineer said.
“People responsible for features will openly sabotage other people’s efforts. One of the most valuable things I learned was to give the
appearance of being courteous while withholding just enough information from colleagues to ensure they didn’t get ahead of me on the rankings.” ....

Anonymous said...

In the UK this directive is NOT being ignored, it's being strictly enforced.

Anonymous said...

It can not be applied in several countries due to labor law.

Anonymous said...

Interesting article here:

http://www.businessweek.com/articles/2013-11-13/microsoft-kills-its-hated-stack-rankings-dot-does-anyone-do-employee-reviews-right

So, lets see...

in the red corner we have the corporate world moving away from bell curves and marching onwards and upwards... Microsoft, Adobe, Expedia...

in the blue corner we have the two IT companies without a clue or a future... Yahoo and CSC

I *wonder* how this is going to end? I'll bet William Hill won't offer you odds.

Meanwhile, welcome to Game of Thrones in your office! Hurrah :-/

I shouldn't really have posted this, someone else might read it and benefit from it. Actually, sod you all, I'm putting laxative in the coffee machine tomorrow.

Anonymous said...

If they are ranking everyone in every group by a forced stupid percentile, the CEO is in a group of one.

Is he a performer or a lamer?

The way these things are supposed to be forced, he has to be given a pay rise and fired.

Anonymous said...

Hilarious reply.

Anonymous said...

So 1621. You are saying are USA monkeys! Do not upset the paymasters. Pathetic and for you to update this site with such a response shows you want to show your USA corporate masters following the green line... green mile..

Anonymous said...

> It can not be applied in several countries due to labor law.

1. They're a small minority compared to all the countries where it can.
2. Just because they dont/cant openly share your bell curve ranking with you, it doesnt mean they havent done one (formally or informally) for their own internal use

Anonymous said...

They're in panic mode. F&A is much more aggressive than I've seen them ever with regards to getting invoices signed before the end of the fiscal year. Have they done this before? You bet. Were they ever this desperate? No effing way.....

Revenue is trickling in and the powers that be are concerned. At least in what it will do to their bottom dollar, not so much for the employees or the company.

Anonymous said...

I wonder why the PR guys aren't releasing bid wins as press releases by and large any more?

It's not because there aren't wins, because internally we see them announced.

If you look at the CSC.com press release section you'll see very few win stories, which strikes me as strange... unless of course surprise is the strategy, creating massive jumps in share price by surprise then silence followed by surprise again.

It must be a definite tactic, not just CSC being rubbish - although many would be quick to think the latter!

Anonymous said...

Perhaps they sacked the team that did press releases? I have seen many examples of customer deliverables being dropped because they one person who had the knowledge was sent packing.

Anonymous said...

Expect more than 10% to leave come May. This year's performance review process is the most screwed up ever in the past 30 years. People are being reviewed by managers they've never met. Even if you score Meet Expectations across the board in your performance factors, you will receive an overall Partially Meets Expectations rating because of the bell curve. And if you have scored Meet Expectations in every category except one, which is a Partially Meets, your overall rating will be Does Not Meet Expectations, giving you no raise and a performance improvement plan (PIP) to get you to quit.

Revenue comes from billable hours; they are going lose a lot of billable hours until they back fill. Makes no sense.

Anonymous said...

So another puff of smoke in the press today about a potential sale .... http://shares.telegraph.co.uk/news/article.php?id=1034236&archive=1&epic=LMT

Anonymous said...

No, that's from 2005

http://www.marketwatch.com/story/computer-sciences-jumps-on-latest-buyout-report

I think if that was going to happen, it would have by now ;-)

Anonymous said...

You're free to leave.

Anonymous said...

^^^^ Glad to see we've finally got an official company spokesperson on here.

Anonymous said...

My prediction. If anyone is looking to buy CSC, they will discover during due diligence that it is a house of cards. Why would they pay the current premium price when they can just wait until the year end numbers send the price crashing? Then they can swoop in, buy it cheap, clean up some of the mess, and sell off the pieces.

Anonymous said...

Yes, many in CSC are running around building transition plans on software product teams for an anticipated end of fiscal year sell out to an Indian IT company. Even the off - shores have been it with layoff per the transition plan.

The CSC company break up and. Sell is guaranteed

Anonymous said...

More RIF's took place yesteday

Anonymous said...

Wave of sackings in India on Friday, 28.03.14. It is being called "Black Friday".

Anonymous said...

If someone were going to do that they would have done it two years ago. I think that didn't happen two years ago because there were so many unknowns (like legal liability) that a potential suitor wasn't willing to take the risk. I left CSC last year because I thought it was obvious that it was only a matter of time before the company was sold. Nothing Lawrie was doing told me he was building a company for the future. Just the opposite, every decision announced reinforced the notion that Lawrie and the Board were positioning CSC for a sale.

Busy Bee said...

Look at Lawrie's remuneration contract and you see he is incredibly well rewarded for sale or for failure (ie termination). The only thing he is not incredibly well rewarded for is building CSC up.

Anonymous said...

Share Repurchase

'Share repurchase' is a company buying back its own shares in the marketplace. It's a company investing in itself and the number of outstanding shares for the company in the marketplace is reduced with each one repurchased. That results, if the 'value' of the company in unchanged, in an increase in the price of each individual share. Company value = no of shares outstanding X share price. It is a way to drive up the share price.

The only reason companies normally undertakes a 'share repurchase' is if there is no other better return on investment available whether that be through, for example, investing in cloud infrastructure to sell/rent to customers, putting the money on deposit (I admit interest rates are historically low at the moment), training staff if it's a people based business or any other action that in the long term leads to revenue growth and a justifiable ROI.

Cynical people may say that individuals with an interest, in the form of a share option scheme, may pursue 'share repurchase' as a way to drive up share price without doing very much.

See http://www.csc.com/investor_relations/press_releases/106413-csc_delivers_continued_earnings_margin_and_cash_flow_growth

Look at the section - Returning Capital to Shareholders. $29m returned in common stock dividends, $125
used for share repurchases.





Anonymous said...

This obviously the most two-faced and hypocritical management team every. Lots of drivel about the team . . . we're in this together . . . we care about employees . . . while having ditched and planning future layoffs of thousands of employees, particularly in the US. Notes about an unsustainable business model are, of course, all true. Recent spikes in stock price are purely due to "Cost Reduction" of throwing employees out the door and speculation on a sale, Doesn't matter if you're an expert in a core business or have 25+ years with the company . . . you're gone. This allows, in the short term, financials to look better while poisoning the long term fundamentals of the business. Expertise and product knowledge in core lines of business are already insufficient to support existing customers, much less to win and grow new business. Whoever is silly enough to buy this shambles will find lots of angry customers, nobody left who knows products because institutional memory and experience has been sacrificed, and outdated and irrelevant products that have had insufficient investment for years. Of course if they pawn this thing off on an India company the theory of interchangeable bodies and saving face at any cost may allow a brief continuation of business as usual until the whole thing imploes.

Anonymous said...

It's not the ones that are free to leave, but the ones that are told to just get out at the drop of a hat, that have my sympathy. Obviously there are those among us who are unfamiliar with the concept of chattel, serfs, and Evil Lords . . .

Anonymous said...

No, that just means that by now apathy rules, that probably 90% of people been driven down so hard, had so many benefits great and small removed, and have been stabbed in the back by incompetent and mediocre management so much, that they just really are beyond caring, just marking time until a new opportunity comes along. It's the way to beat senior and experienced people out of the organization in order to replace them with cheap young labor to cook the books.

Anonymous said...

Ah, yes! 21:13, that's the new CSC spirit! I see you have at last been reprogrammed by the new CSC mentality and goals! Please post other tips and suggestions for everyone else to get ahead in the new Corporate Game of Thrones!

Anonymous said...

And as the revenue stream trickles ever slower, the pace of employee reductions to prop up the books by "Cost Reductions" will continue. The financial statements MUST be maintained AT ALL COSTS (pardon the pun- that was pretty sick). There are those who will laud certain elements of the financial statements in self serving ways (i.e. those who are institutional investors who will take a bath when this thing collapses) and keep smiling. The astute analyst will focus on backlog, new sales bookings, and most importantly, the ability to deliver. Herein lies the thorn - CSC's worsening ability to actually deliver on the business it has sold won't be felt until further down the road - after some poor schmuck of a company has already bought this mess. It's already pretty obvious that they are marshalling all their resources in many groups to practice Corporate Denial & Cover-up about what poor shape many existing contracts are in. If you think CSC had a portfolio of poorly performing contracts in the past, you ain't seen nuthin' yet . . .

Anonymous said...

Here's an answer for you Skippy . . . there aren't that many bid wins to talk about now. And since they have fewer and fewer things to release and talk about . . . they have fired all those low-salaried marketing people who used to do press releases.

But seriously, they aren't selling their once-flagship products because, in many cases, they have destroyed them from within by incompetence, and the new areas of Big Data, Cloud, and other "modern" business are ones in which they are, at the end of the day, unable to compete. The new business model is simply CSC saying let us be the middleman . . . we can sell you other people's cloud products, network services, and many other things, without adding any real value of our own. Why do business with these morons when you can easily bypass them and deal with a real company?

Anonymous said...

Absolutely agree with 01:15. Any employees with have a vision of reality will be abandoning ship now. Just in case you need it in plain language, let me help you - you are chattel, of little value, you are merely an expense item hurting our bottom line, and we plan to continue reducing staff just as fast as we can possibly process them out the door. You are not safe regardless of geography, skill set, or tenure.

Bail out and look for a new job before CSC floods your local job market.

Anonymous said...

When I joined CSC, a long time ago, I must admit I was very proud,
In the meantime this has changed a lot - and considering the short sighted management decisions of the last 12-18 months - I just wondered whether the goal of our management was to break all records in the Dilbert's Book of Management Failures.
But when I hear that our CEO would get a bonus of 120 mil. USD if the share price climbs slightly over 68, then this makes a couple of things more transparent...
Now considering what happened over the last 18 months one may assume CSC's ***REAL*** corporate value was substantially reduced and somehow our current share price is more than faked. So if I were the future buyer (HCL?) I'd consider all options to sue the current management.

Anonymous said...

Lawrie and team are not leading. They are cutting. They are slashing. Doesn't take much imagination or skill to just fire people. No leadership. Short sellers will be celebrating soon.

Anonymous said...

600 employees laid off last week without any warning. If you weren't on the books for 2015 revenue growth -you are gone! No matter how long you've been there or how intelligent. I don't understand how they have so many incompetent dumb asses in management positions. I was with CSC for over eight years - had a new manager after layoffs two years ago. I was on the bench and got a call last Thursday saying there is a workforce reduction, but there is a 90% chance they will be re-hiring me on Monday because the client opportunity would be pulling through. The new manager plays the part to cover his own ass - had me doing his work - he couldn't even put a project plan together. I asked him do I get billable for this work for client, comment back - NOPE. What the hell is that. I already have an interview with top consulting firm next week and my resume has been placed in the fast track in another big 5. Best thing to get laid off. I had been preparing my resume anyway because I wasn't happy and starting to not be a friendly person to work with when it came to those idiots. and my resume has been fast tracked with another top firm. I have heard talks about a buy-out and Mike possibly pursuing this route. CSC is going down!

Anonymous said...

Why leave? Take it easy and wait for the redundancy. ... if survive not doing much..great. if get paid out then mortgage free and cash in the bank with pension boost. Lot of people waiting... .. only an idiot would leave when cash offer to leave will turn up... also csc does not really fire people through bad performance..

Anonymous said...

Huh?

Anonymous said...

Why leave when redundancy package worth over 90000 dollars.. people waiting to be paid out. Huh!
Every pay check.. great.
Redundancy.. hoo rah!!

Anonymous said...

Who would want to buy this piece of garbage? No real sales, no real products, firing the experienced and product knowledgeable staff at an unprecedented rate, and only mediocre senior management that survives by puckering for posterior. All one would be buying is a collection of outdated products and an organization that's being transformed to be nothing more than a broker and third party seller of technology.

Anonymous said...

And the interesting thing is that Lawrie's senior management team are busily cutting each other's throats. Just look at the number of senior leadership that's vanished over the last 12 months . . . and not just the Old Guard, but Lawrie's hand-picked team included (e.g. Ms. "I Am Pleased To Announce" EVP of HR, Siki Gunter, et al).

I agree with the above in that short sellers will be having a field day in no time. Lawrie may be able to deceive and lie through the end of the fiscal year in March, but woe be to the stock holders at the end of the next quarter. All the hype and industry propaganda are targeted to let current Wall Street investors rape it while they can.

Anonymous said...

After the recent slash at Blythewood and across India, expect the grim reaper to return to Europe with a vengeance.

Anonymous said...

Clearly you are in Europe. Here in the States you are shown the door.

Anonymous said...

Liz Benison (head of UK and Ireland) is gone it seems... the announcement didn't say who was replacing her either.

Just more random short term management tenure or a significant event?

Anonymous said...

And as is obvious, building CSC up into a solid, reputable company is the furthest thing from Lawrie's mind. From the minute he stepped into the CEO office his plan has been obvious. You only have to meet him one time and look him in the eye to know you've just seen a real slimeball.

Anonymous said...

This is just par for the course. People at Liz' level are touted as the savior of the region / business segment / etc. right up until the time that they vanish in the night without a word. The key in the above post is "it seems". Never any general announcements or news on the transition, never easy access to current and accurate organization charts. About the only way to know that someone has vanished is to try to look them up in the company email directory.

Expect to see more disappearing management types. As Lawrie abandons pursuit of sound business strategy those expensive management types are just more dead wood to cut from the bottom line. It will be interesting when the inside crowd that has perpetrated mediocrity and incompetence wake up one day to find that they are disposable as well. This is particularly true of the Praetorian Guard that is supposed to be overseeing and improving customer delivery quality for the corporation but in reality are only covering inept incompetence of their own and putting lipstick on the pig to preserve the illusion that all is well.

Anonymous said...

Another round of layoffs today, many senior tech staff shown the door. For those of you still working there, get your resumes out now. It's better to seek new employment while you still have a job rather than after you get sacked. Get out while you can. CSC's loyalty stops at the Board.

Anonymous said...

The decision to move from BMC Remedy to Service Now as an offering is fraught with half-steps and error. First, it was upgrade to the latest version of Remedy (8.1) on a Unix platform. Then no, lets move the entire upgrade to the UK and start over with a Wintel platform. Now, that's being halted and Service Now has been engaged as a 'partner' with CSC acting as a middleman. Indecision is rife and customers are left swinging in the breeze while CSC sorts its skivvies. No wonder the revenue stream is flat

Anonymous said...

A lot of staff get the impression that Lawrie is out to split the company up. It will be a shadow of the old firm in 2 years.

Anonymous said...

No, even if you have a staff and all are performing at a level 1 or 2 the deciding factor in rating that employee (s) as "average" or "below average" is the importance of their job. Things are getting cut throat around there. I am glad I left but I feel for my colleagues that are still there.

Anonymous said...

All very interesting lets see what the results are on 8th May, I think they will be bad ,

Anonymous said...

oh dear

Anonymous said...

Stock just broke the $65 threshold for the first time in TEN years! Two VP's just resigned to cash out before the big sale: Bob Welch and Eileen Sweeney.

Anonymous said...

i'm a current CSC employee, have always received top merit and performance based on very measurable success i have brought to the table for CSC government/military contracts. For the past two years, this bell-curve type of approach to performance reviews are a joke and step back to the ice age. i can't honestly believe i'm working for a 'tech' company that takes this approach to corporate management. There is a complete re-alignment in HR, where in i have no idea who that people are that i actually report to. The update to recently to insure all employees have resumes up-to-date, all certifications/qualifications are listed in their profile, and witnessing only 2 of 300 people i work with getting a merit increase(1% which is an absolute joke)...this all goes to show the typical trend that CSC is preparing to sell and wants the inside of the company to look worthy to those on the outside. i have seen more people quit in the past 6 months that the accumulation of my time of 8 years with CSC. Screw a Christmas card, haven't seen those in years, just a simple good job and Merry Christmas email from a direct manager or task lead would be nice. Moral sucks, if CSC sells to a take-over, all profits should be evenly distributed to every employee, not just share-holders and CEOs.

Anonymous said...

Definitely the most demoralizing place I've worked.

Anonymous said...

None of the company is good or bad its only people and managers who make them so. I would say this time for CSC Its their Managers specially Noida, Hyd, Chennai and Indore.

arpit said...

correct