Wednesday, 10 February 2016

CSC Q3 FY2016 results – “excluding the impact of certain items”



Excluding the impact of certain items like mortgage payments, tax bills, education costs for my children, transport costs etc, I would be financially quite well off.  And so it is with CSC’s Q3 FY2016 results.

Non-GAAP EPS was headlined as $0.71, slightly above analyst expectations,  “excluding the impact of certain (cost) items”  totaling $0.61.  These “certain items” were principally separation and transaction costs, together with an increase in the expected tax charge. They seem pretty normal and real to us, so why not just say clearly that EPS was just $0.10?

It’s as if we are going back to when CSC’s previous CEO Mike Laphen started talking about the company’s profits  “without this unusual item and that exceptional cost”.  It turned out to be his first line of defence in explaining away declining performance.  Mike Lawrie, on the other hand, when he first joined CSC, got rid of all that smoke and told us the way things were. Why are we now going back to the habits, which preceded CSC’s worst days?

Non-GAAP net income after taxes for Q3 FY2016 “after excluding certain items” totaled $124million, up from $109million in the corresponding quarter of the previous year. In the real world of GAAP (Generally Accepted Accounting Principles), with the inclusion of these “certain items”, the net income after taxes was not $124million, but just $78million. As a point of comparison, Goodwill on the balance sheet increased by $188million in the quarter.

Revenue for the quarter was $1,750 million, $100 million below expectations and down 10%  (5% in constant currency) compared to Q3 FY2015.  Nothing new here, just continuing revenue decline no matter how much spin you put on it.

No details were provided of free cash flow nor working capital movements, CFO Paul Saleh being unusually vague on the details.

Mike Lawrie’s comments to the analysts were pretty much a re-run of what we have heard before. Headwinds in the legacy business,  strength and good prospects for next-generation offerings etc etc.  He expects a great outlook for the offerings of the planned acquisitions UXC and Xchanging and can see revenue growth just over the horizon!! Just like he did for iCloud etc. Ooh I wonder what happened to them?

In general, Messrs Lawrie and Saleh seemed to give fewer specifics in their answers to the analysts than in past conferences, but curiously dwelled quite some time on the relatively small legacy short-term “non backlog” consulting business. We hope this vagueness is not the beginning of a trend back to the bad habits of a few years ago.

Mr Lawrie stated that Q3 new business bookings,  at $2.7 billion for the quarter, were the highest for over two years. At last here is our growth. But then one analyst went “off message” and reminded Mr Lawrie that in November he had explained away the poor bookings performance of Q2 FY2016  as business which had really been won in Q2, but which just slipped into Q3 FY2016.

CSC employees listening to the analyst conference were probably surprised to hear Mike Lawrie say, in answer to an analyst question, that the biggest operational obstacle to to growth at CSC is (lack of) skills and people. Well, Mike, we can help you there. Stop firing your highly skilled people, ruining moral, and reinstate training budgets.  

So there it is. CSC’s outlook is great, the future is bright and the numbers are very good, at least “excluding certain items”.  The company just needs to find skilled people!

I wonder why this story does not match what we hear from employees of all levels within CSC, or indeed see in the actions of customers who continue to walk away.


73 comments:

Anonymous said...

with reference to a lack of skills.....

the retard doesnt realise that the majority of CSC staff do find work, and they get jobs with competitors who are supposedly doing better than us. Now Mr Retard...sorry Lawrie, if you throw something out as trash, and somebody else picks it up and is using the trash to win more money, who's fault is it?? the analysts are pretty dumb too.

This is a broken record.

Anonymous said...

Lawrie believes the workforce is past its sell by date. He effectively said that on the call.

Errmm, Mr Lawrie, incase you didnt know, there is such a thing as new tech, and people can only learn new tech when they have exposure to it. People are not born with knowledge, its acquired, so pay for training. If we are so old school, what are you still doing here Mr contradiction. You have not got a clue.

Anonymous said...

CSC's Next Generation Offerings - when are they due for release as they have been talked about for years, sold as vapourware to clients and more spin and lies to the analysts and staff.

With the ever reducing number of products, clients and staff - perhaps CSC will just disappear up Mikey's $%£" - much like the `butt monkey' in Evan Almighty!

Anonymous said...

CSC stock closed 10% down at $27.72 today due to Lawrie's guidance on Q4 FY16 EPS which was at the bottom of the range of analyst expectations and implies that Q4 will be flat with Q3. Is reality catching up with him?

Anonymous said...

He's right in lack of skills.... After laying off most of the people in my department.. others have left for better jobs elsewhere. - And now I'm leaving too in a few weeks :) - there is only a skeleton crew left.

Anonymous said...

CSRA shares up by 10% after yesterday's announcement of its Q3 FY16 results and strong guidance on Q4.

Q3 FY16 EPS of $0.48 beat analyst consensus by $0.06.

Revenue of $1.27B (-5.2% Y/Y) misses consensus by $50M.

Q4 FY16 guidance of Revenue $1.28B-$1.33B and EPS of $0.45-$0.49; the former is below a $1.37B consensus, and the latter above a $0.41 consensus.

Give CSRA the benefit of the doubt for the moment, but it looks like they may be using he same recipe as CSC to maintain the stock price.

Anonymous said...

>> Goodwill on the balance sheet increased by $188million in the quarter.

I wonder if/how they account for employee goodwill to their employer.

>> So there it is. CSC’s outlook is great, the future is bright and the numbers are very good, at least “excluding certain items”.

Cool. No reason for there not to be at least inflation-equalling pay rises this year, we're doing so well, Mikey just said so.

Anonymous said...

Will the inflation-equalling pay rises this year also compensate for the lack of rises over the past few years?

Stupid me, pipe dreaming again about the prospect of any pay rise this year.

Anonymous said...

Mikey isn't interested in keeping the high dollar Neanderthals with legacy skills. He wants low dollar freshers with the shiney next generation skills from low cost centers in far away lands. So if you're over 25 or make over $25K, take the hint. He sees no value in you.

Anonymous said...

@Anonymous 12.2.2016 01:37 have to disagree with you on that one. Yes they try to get rid of the old workforce with partly outdated skills. But they still value skills and work experience. Also in higher-level positions. People with salaries above 100 k $ are hired around the globe.

Anonymous said...

Perhaps Mikey should get rid of himself then ?
Old boy with outdated skills and costs $millions !
If the only tools in his box are to cut positions, creative accounting,
smoke and mirrors with investors whilst the co. spirals down into oblivion perhaps he needs to go sooner rather than later !

Anonymous said...

Excellent introductory commentary. Damage control can take you only so far and the question unanswered is whether it's too little, too late? Financial considerations are discouraging going forward and a workforce without the necessary competencies does not offer a favorable horizon. Problem with Mike Lawrie is that he wanted to be a Jack Welch wannabe and after Lawrie's foray into the Rank and Yank debacle, the company emerged with serious wounds. Seriously, is he worth what he gets paid in light of what's happened?

Anonymous said...

Apparently the compensation committee thinks he's worth what he is getting paid. Of course, take a look at the compensation committee.

Anonymous said...

You must be joking right!

Anonymous said...

Wait for the announcement coming out in the US on Tuesday that the vast majority of people in the US and Canada are being forced to take 40hrs of vacation before Mar 31 - even if they go into a negative balance

Anonymous said...

EBG no longer exist...so Big Data only modest growth in GBS. Cloud, Mobility or Cyber are not mentioned in Q3 summary. Despite all the negativity. Clients still award contracts and partners still consider CSC a key element in their activities. Numbers still go down and so do people. Could that be stopped if managers at CSC would be allowed to invest in existing and new resources before new business is even won?

Anonymous said...

Actually I am not joking because you are wrong. Positions that pay between 25-200 k are available and filled. Depending on the role and skill level the company has to follow market trends and clients are willing to pay for it anyway. This blog is a good resource for many CSC employees to get information about what is really going on elsewhere. Its a better source than internal water cooler or official communication. It tends to have people comment their negative feelings/experiences. Just like others I am frustrated with the way the company is led, the actions (or lack thereof) of key managers and see the hipocrisy in many actions. Its important to stick to the facts though and see that the grass can also be as green as in other places...

Anonymous said...

Really?? Recent changes had forced us to use any carry-over vacation by end of fiscal year -- effectively April 1 this year.
Friday ( Feb 12 ) we (where I work) were told to submit our Emp #s and hours carried over that we would like to use during the entire calendar 2016.
I figure it's any of the following:
1. The Powers-that-be just realized that so many people taking vacation this quarter would really hit year-end results.
2. They intend to let a large number go and will then only have to pay 50 cents on the dollar for unused vacation. (and there ought to be a Federal law prohibiting such robbery...)
3. The clients are discovering that they'll be short-staffed this quarter and are screaming bloody murder.

Anonymous said...

Reference lack of skilled staff.. he means cheap India labour.. europe and USA good skilled staff.. to expensive. Also the more he cuts in the founding nation..the better the analysts like it.. well they used to.

More cuts to come.

Anonymous said...

Agreed re the blog being the only source of truth, but green grass in CSC I think Mikey bought all the grass killer he could and spread it widely when he joined the company - unless you know somewhere there is a hidden bit of land that Mikey doesn't know about yet. the whole company which used to be a good place to work for is now one big negative experience!

Anonymous said...

OK. Bye....

Anonymous said...

Tut Tut. CSC does support us in our efforts to gain new skills. In my area we are constantly encouraged to do training in Cloud, AWS, Big Data and analytics etc.etc.
Of course, it is also made very clear that we need to be doing this in our own time.

Anonymous said...

One of mikeys first actions was to give the non-exec directors a pay rise. Dont hold your breath waiting for the board/committees to raise their eye level above the pig trough.

Anonymous said...

Yup - it's 40 hours on top of all your carry over

Anonymous said...

worst company Ive ever worked for. Mobbin is the only skill management is good at. The abuse is so deeply assimilated into the organizational culture that employees don't even see nor feel it. It is sad to see how people accept this and even cooperate and encourage it. If you haven't left and you are not a manager you should really open your eyes and learn to take the loses and run from that hell. if you are a manager, I hope that sooner or later you will be accountable for what you have done. Tip: stop asking employees to bill two clients at the same time. Answering that you did it because everybody did won't be of any help.

Anonymous said...

Can't make this stuff up:

While CSC reported a generally solid third quarter, revenue in the Americas region has been well short of projections. With the fourth quarter underway, it’s important that we align our costs with this reduced revenue outlook in order to protect profitability. As such, we’re implementing a vacation utilization initiative for the fourth quarter of FY16 for higher-level Americas region and corporate employees with specific titles based in the U.S. and Canada.

The initiative will require employees with the following titles (who do not fall into one of the exemption categories*) to use 40 hours of vacation between now and the end of the fiscal year (April 1, 2016)—in addition to any carryover from the previous calendar year:
President/CEO
Executive VP/GM
VP/GM
Senior Managing Partner
Director
Senior Partner
Senior Principal
Managing Partner
Senior Manager
Partner
Principal
Practice Partner
Manager
Advisor
Associate Partner

In implementing this initiative, employees and managers should follow this process:
By February 19, managers will collaborate with their respective employees to confirm the specific dates each employee will take 40 hours of vacation plus any carryover vacation that best meets client, project and personal needs.
By February 26, employees will enter the confirmed vacation dates and hours into myTIME.
If employees and managers jointly agree that a critical business reason should exclude an employee from this initiative, the employee’s immediate manager will submit an exception request form to the Q4_Vacation_Exception@csc.com mailbox for consideration.

We realize that this initiative may pose some challenges for us individually and collectively—and want to personally thank each of you for your continued leadership, support and participation as we look to finish our fiscal year strong together.

If you have questions on this initiative, please refer to the Question and Answers document on the Americas C3 site or discuss in more detail with your manager.

Thank you.

Paul Saleh, Dave Zolet, Steve Hilton and Jim Smith

Anonymous said...

And the e-mail should have noted it needed to cover over $2m of stock sales by the CEO in January.

Anonymous said...

mmm only for non billable people I guess. It is not just 40. 40 + whatever carried forward from previous year. Which means in most cases it is 80 hours. This is only for PMs and above that are not billing T&M

Anonymous said...

"protect profitability" or protect the illusion of profitability......

Anonymous said...

I don't know why they bother this accountancy shuffling. They only talk about stuff in non-GAAP terms anyway. Just decide to put holiday owed into the non-GAAP black hole as well. Its just another lie like all the others.

Anonymous said...

CSC stock price plummets after earnings announcement...
http://www.thestreet.com/story/13455132/1/computer-sciences-csc-stock-plummets-on-revenue-miss.html?puc=yahoo&cm_ven=YAHOO

Anonymous said...

Surely they should have just said anyone who is not technical and actually doing a proper job/work?

All the roles are fat cat management. But it is the same people they do not list to take compulsory holiday who they make compulsory redundant.

What a MESSSSSSSSSSSSS!!!!

Anonymous said...

Take 12% off of your bottom line and still make money (Sequester)... CSRA Federal is a true integrator, defining the standards in private cloud, which are being applied to the FedRamp and GovCloud initiatives across the globe. Commercial is having trouble, not only in our market, but across commercial globally across many of the top companies. How to work the commercial book of business in a world where they do not "Print Money" any more?

On the other hand, CSRA Federal has been challenged by tremendous budget cuts to actually Perform and Deliver, readying ourselves for the massive sucking sound when youAll realize that public commercial cloud is insecure. Don't worry CSRA Federal is the real deal, we will have great evolutionary offerings for all, and I am sure when CSC commercial is sold to some Over Seas Company who still believes in Hiding the Money (healthcare).. CSRA Federal will buy some small Rocket Science Technology Group and Rule the Space..!

Anonymous said...

Is that you Mikey, you can't fool us.

Anonymous said...

ROFL 16:44

Anonymous said...

Fed side now getting rid of all people that don't have billable time. Being re-deployed is what they call it. but if you get rif'd and they find a job for you, which they are encouraged to do, 15% less than you make and adds an hr to your commute, you may not be qualified for, and you turn it down, it is considered voluntary termination and they don't pay you for the 8 weeks you are due and you cannot claim unemployment. Crock of bull-no whole building of bull.

Anonymous said...

I presume that as Mikey is not billable he is also on the 'hit list' this time?

Anonymous said...

Nothing surprises me with CSC any more - paying nothing to get rid of what were probably valuable staff with no respect or concern for them or their dependant families is very low though. Makes me wonder how low they can go..

Anonymous said...

When has this company ever considered impact to families or to the employee that has busted A$$ for years (decades). It shouldn't surprise anyone.

Anonymous said...

CSC will be gone soon, but only after senior management has milked the company for untold millions of dollars and road off into the sunset looking for another victim.

Anonymous said...

03:38: Im afraid you are right. No matter what happens to CSC senior management will get millions. And still get a new high payed job. - But I still wonder how long CSC can carry on? - They cut the fat away.. fair enough.. Then the meat.. now we are into the bone. All the good specialists are leaving now by own accord.. including myself after almost 2 decades in CSC.

Anonymous said...

Today's Annual Evaluations and Merit Planning meeting merely shored up what's long been assumed by CSC/CSRA employees. Lack of money and deferment of merit increases to next year sweetens pockets of profitability. All this done, of course, on the shoulders of the employees. Merit increases for next year not guaranteed either, since any payout would be tied to how well the company is doing on the market. The take away message is to expect more talented folks to migrate away from this company.

Anonymous said...

Uk getting pay rises and bonus under serious consideration. I THINK previous poster making it up.

Anonymous said...

They paid nearly 1bn USD in acquisitions and your saying they don't have money?

Anonymous said...

The fact is Lawrie has this really twisted way of thinking where he blames certain layers for operational failures and lack of new business.

We can't all be working at optimum levels and still be that bad. Somebody is to blame and to be fair he has fired people at the top as well as people at the bottom.

UK just won £250m contract with MPS but they don't have the staff to fill the roles.


Anonymous said...

It is amazing that CSC are allowed anywhere near the UK Public Sector after the NHS fiasco, let alone awarded any contracts.

Anonymous said...

Maybe they took a leaf out of EDS's book - any fiascos and "fines" for failure to deliver were "paid" in the form of discounts off future bid wins. Abject failure almost ensured more work.

Anonymous said...

Re the MPS contract - they don't have the staff to fill the roles and to cap it all they don't have a product either - "help the UK Metropolitan Police Service (MPS) create a next-generation digital policing workplace through CSC’s MyWorkstyle" - as far as I know CSC MyWorkstyle is vapourware - so a good smoke and mirrors win for CSC.... you gotta smile.

Anonymous said...

Maybe not. Been hearing the same at our site about little or no money to spread out. Stay attentive to csra website discussions. May offer more information.

Anonymous said...

Is that e-smoke and e-mirrors?
MyWorkstyle is "sell it cheap then worry about how to deliver" because the people who sold it will be long gone before the poor sods who are left have to pick up the pieces!
Leave while you can, the grass is very green!

Anonymous said...

Any thoughts about the J. Reing email regarding the performance appraisal process? Interesting to note the following: "We are committed to re-introducing an annual merit plan and have already discussed our plans for FY18 with the executive committee of the Board. We have agreement that we will have an FY18 merit budget that directly reflects our FY17 results, creating an enterprise-wide incentive to deliver high performance." So does this mean that everyone gets penalized if the company doesn't reflect market expectations?
And you think that talented people won't continue to leave, which will further damage existing or future business?

Anonymous said...

Looks like they cut too deep in the UK

http://www.jobserve.com/gb/en/search-jobs-in-Chorley,-Lancashire,-United-Kingdom/INFRASTRUCTURE-PROJECT-MANAGER-ASSOCIATE-PROFESSIONAL-392BA78F263C9452/

Anonymous said...

They also looking for contractors to fill roles at Gosport on experis http://www.experis.co.uk/jobs/?sortdir=desc&q=project+manager&pagesize=12&sortby=Rank

Anonymous said...

So what about the existing employees who have the skills but are payed way below the market rates?

Anonymous said...

CSC makes comments about how gender parity increases net margin by 6 percent http://blogs.csc.com/2016/03/08/how-to-add-6-percent-to-your-net-margin/ while its leadership always and still consists mostly of old white men...

Anonymous said...

@13:41 - My Workstyle / Proj. Rose was never cheap for an ill-fitting suit of yesterday's virtualisation...

Unknown said...

Final merit calibrations for rewarding our staff for their hard work this year is being done by Mike Lawrie on April fools day.

Anonymous said...

@16:25 I'd be happy to accept such a company performance merit scheme if the same trigger points applied to everyone. Ie you tell me that there's no money for me, then there also isn't any money for the c-level bonuses or increments, share buy backs or shareholder dividends. Actually be honest with us all, try no telling lies about "global" stuff when you actually mean that my region is doing something (presumably to trigger their own management bonuses). Honesty is a really important business tool, the lack of which got CSC into terrible places before and doesn't seem to have been achieved despite this.

Anonymous said...

@21:31 - you are Mikey's ideal employee. They love you to bits. Please don't leave, CSC needs you.

Actually, could you do it for a bit less? Maybe from a low cost location in a POD, a three hour commute to work isn't that much of a problem to keep your job is it?

Anonymous said...

John Michael Lawrie , President and CEO of Computer Sciences Corp sold 16,770 shares on Mar 10, 2016. The Insider selling transaction was disclosed on Mar 14, 2016 to the Securities and Exchange Commission. The shares were sold at $30.61 per share for a total value of $513,937.34.

What is the world coming to when Mikey can only get hundreds of thousands of dollars for his stock option sales??

Anonymous said...

Junior PM's for Chorley UK Reposted 14/03

http://www.jobserve.com/gb/en/search-jobs-in-Chorley,-Lancashire,-United-Kingdom/JUNIOR-IT-PROJECT-MANAGER-48064D11771096D2/

Looking at the skills requirement replacements for Senior Professionals.

A work of advice to anybody considering this - don't!

Anonymous said...

Check to see if he sold CSRA shares on the same or close to the same day to make up the million plus. There's a good chance he did. Remember, this is post-company split stock prices. But he got equal or close to equal shares in the other one as well.

Anonymous said...

Corporate Controller Michael couldn't take the lies:

http://finance.yahoo.com/news/liquidity-services-announces-appointment-michael-214800411.html

So guess who steps in:

https://biz.yahoo.com/e/160317/csc8-k.html

Anonymous said...

corrupted to the bone, that's the most CLEAR and encouraged value this company has.

Anonymous said...

Doubt he will make enough in his new role - http://www1.salary.com/Paul-N-Saleh-Salary-Bonus-Stock-Options-for-COMPUTER-SCIENCES-CORP.html

Anonymous said...

Please tell me this is a joke,

Junior project manager posts advertised with senior PM specs??

Anonymous said...

CSC will miss revenue target for for every year Lawrie has been in charge. You will see that in the final FY16 results. This is not me guessing. Its confirmed.

Anonymous said...

FY16 result is revenue target missed, cost take out has balanced the book.

You dont need to be a genius to figure this out, Lawrie is only in a job because each year he has managed to balance the book with the cost take out.

Now for FY16 end end FY17 he has a few choices:-
1)Leave
2)Continue with Plan Z and more cost take out
3)Pray for a miracle

If he has any shred of decency he will leave, its obvious his plans have not worked, but i suspect he we go with option 2.

Just been on a UKI All Hands, and the theme of the meeting was staff are poor and they are not providing our customers with a decent service. Do these retarded idiots not realise that there is no staff left to do the jobs. They complained about BAE failing practically all their SLA's.... when was the last time he took a look in Preston CSC building?? apart from himself did he see anybody else??

Can't really blame these idiots too much, but they need to grow a pair and push back. For each year revenue fails, Lawrie HAS TO COST TAKE OUT, otherwise he wont get paid. This idiots will cut heads, and then have the audacity to complain that the service is poor.

Anonymous said...

Is the revenue missed by 10% - the same ten percent its been declining every year since Mikey rolled into town by any chance?

Anonymous said...

Glad I have left, but this blog never fails to amaze me - I can image the atmosphere on the UKI All Hands being told you are no good at your jobs (btw who runs it these days - the cleaner or the car park attendant) - very motivating. Are you sure the all hands is not just spouting lies to demoralise the staff just a little more so you leave of your own accord with no payouts?

Senior PM specs with junior salaries - sounds about right - it goes with the rubbish service to customers - blame the PM's when they cannot cope...

Another happy Easter from CSC - :)

Anonymous said...

Yeah its odd really. I mean in a business where you are mainly charging for your services and those services are based on employee time, who'd have thought that seriously decreasing your head count year on year would mean that revenues would fall.

Anonymous said...

Revenue targets or budget as they are called have been set unrealistically for CSC as a whole and e.g. GIS (incl. Cloud), GBS, Cyber for years - regardless of market conditions, bottom up planning or past performance. There are people who say there are two books in CSC. One for Wallstreet, the other for CSC internal. The latter is setup in a way to prevent variable salary pay out. Again an assumption by many. The respective incentives for regional GMs are a big secret but considering the fact that Mike has very different incentives tied to EPS/stock price then the rest of the company which mostly follows e.g. global Revenue, OI budget targets, there is a general conflict of interest between CEO, regional GMs and employees on variable pay out schemes. Sales targets are equally unrealistic for the individual (and that is well known to many of our competitors who recommend only to join CSC if the fixed salary is high) but at least there is a chance of some pay out if you are on those plans. For the past weeks and months the wheel turned faster in various reasons. People quit by themselves, were pushed out by frustrating them strategically or were offered severance packages. In other areas financial engineering is done (e.g. forced vacation in Americas) to once again optimize the balance sheet for FY16 end. Unfortunately there are people at the L1/2 level who think that people would stop working hard if they would reach their objectives for 100% pay out. They are the same people who think that you can shrink yourself to greatness why the rest of the industry is willing to pour millions into growth topics.

Anonymous said...

20:49 is spot-on based on my experience as well.

The whole thing is a well-oiled machine designed to deliver precisely what Wall Street wants to hear on the earnings call. There is NO focus whatsoever on sustainability or growth. It's a house of cards ready to collapse. I am trying desperately to get out before it does.