CSC has announced its results for the second quarter of this financial year. The results are unsurprising consisting as they do of further declines in revenue across the board, ‘adjusted’ results like EPS meeting expectations and cash flow improvements on previous quarter. The results are also unsurprising to Mike Lawrie who kept repeating that "this (revenue decline) was expected".
Mr Lawrie and Paul Saleh are sounding more and more like their unlamented predecessors explaining that without this special item, that charge and the other unusual item, the results are so much better than they look. In doing so they seem to have overlooked that Generally Accepted Accounting Principles (GAAP) exist for a reason, which is to clearly report the performance of a company; not just to allow executives to explain what they think the results should have been. Mr Lawrie continues to see great things on the horizon, with next generation offerings, great growth in new markets and so on. Just as his predecessor Mike Laphen did in 2010 when he told us CSC had everything needed to succeed.
Note how the figures that matter, like how much revenue did CSC earn, the ones that are difficult to adjust, show a company getting smaller every quarter; while other financial figures that are adjusted for ‘special events’ and ‘currency’ show improvements. Strange that don’t you think?
We did learn from Mr Lawrie that CSC businesses are now "orchestrators", whatever that means. It is a pity none of the analysts asked what it means. Perhaps it means CSCers are not players any more!
On this earnings call the analysts were even more docile than usual, and allowed Mr Lawrie to push many questions to "tomorrow", meaning the Investor Conference of 5 November.
All in all, the results seem to be smoke and mirrors produced to suit investors and not much else. In this respect Mr Lawrie has been very successful. He has managed to drive CSC's share price to a level that was unthinkable when he joined the company.
He has planned a split of the company (yet to happen and running late) which will allow investors to hedge their bets for the future, and collect a large cash dividend to be paid out very soon. The share prices been kept long enough to allow all prudent investors to cash in a good return before reality hits, which it certainly will sooner or later.
He has achieved all this while presiding over the decline of a once great company. How does that return share holder value over the long term?
The above is really why there are so few new posts recently from Cassandra. There is really nothing more to say about CSC, as it should be obvious by now to all staff and potential customers that CSC is now a vehicle for asset stripping and stock ramping.
It is Déjà Vu all over again!