Wednesday, 10 August 2016

CSC Q1 FY17 earnings....or into the last quarter of the game


CSC announced their Q1 FY17 earnings. In the analyst call at which the results were announced; to use a sporting analogy, they gave the impression of a soccer team going into the last few minutes of their last match with a one goal lead which they want to preserve at all costs.

The prize at the end of the game, if they can preserve the lead, is promotion to the top tier with the merger with HPE Services. This will give CSC a new start amongst the big players, having been relegated to market mediocrity by earlier mismanagement.   So one
can understand that Messrs Lawrie and Saleh are doing their utmost to avoid any errors which could jeopardize this future.

So it was no surprise that the results showed a profit in non-GAAP accounting terms, which is what Mike Lawrie addressed, along with further earnings growth. The operating loss in GAAP accounting terms barely got a mention. It was as though GAAP accounting standards, on which all proper business reporting is done, are not worth the bother. 

The  quarter's earnings exceeded analyst expectations, as they usually do. The novelty this time being the Year-on-Year revenue growth of around 8%. This was due to the revenue of the recent
acquisitions being consolidated into the results. There was no
organic growth. New business bookings were lacklustre, but
Mike Lawrie pointed out that if one takes account of a business
booking which slipped into Q2, things look much better.

Mr Lawrie gave his usual upbeat and often repeated commentary about 'tremendous growth' in next-generation services without quantifying the level of revenue. He disclosed that CSC has won a large Business Process Services contract in the insurance industry with MetLife. But gave no financial figures on the deal. It looks to be good news as it gives the company a chance to start making up for lost ground in a segment in which CSC could have been a market leader and some would argue should have been a market leader.

The analysts' questions did not pose any real challenge to Messrs
Lawrie and Saleh,  who must have finished the earnings conference
with the feeling of a job well done, safe in the knowledge that
their one goal lead was still intact, while the clock was running down and they had moved closer to winning the match.

39 comments:

Anonymous said...

Not a footy fan either, but like the comparison.

Anonymous said...

I'm sure with Mike and Meg holding the reins it wont take long to screw up the new merged company, after they've collected their bonuses of course !

Anonymous said...

Well the purge is happening in the US. Guess they are getting ready for the merger of the 2 worthless companies. Already seen several of my long term friends (over 20 years) Riffed and now myself. I am actually glad to be gone from this unethical group.

Anonymous said...

The world would be a better place without Mike Lawrie and his cronies ... oops I mean 'The Shareholders'

Anonymous said...

Another Monday, another inbox of emails saying goodbye from colleagues binned late on Friday. I wonder how many more I'll discover aren't there when I need them later today.

Anonymous said...

Unfortunately I missed the call as I was busy checking my pay packet to find out whether I'd got a pay rise or a bonus this year (sadly, though not surprisingly, not ...again!). What sort of company/senior management team can't even be bothered to tell its employees whether they will be receiving a raise/bonus? Reprehensible behaviour from a once great company now totally devoid of any moral compass.

A good friend worked for EDS/HPE in the UK for many years and saw them go through precisely the same "race to the bottom" as CSC has been engaged in over recent years (cut costs to the bone, and beyond, to "hide" the lack of any real growth), truly a match made in heaven.......

Anonymous said...

>> What sort of company/senior management team can't even be bothered to tell its
>> employees whether they will be receiving a raise/bonus?

One that doesnt want news leaking out ahead of the analysts call that suggests the Emporer might infact be naked?

Anonymous said...

One wonders what toxins from the Lawrie camp will still percolate in the CSRA machinations. Company is still trying to get its footing. Would be interesting too if CSC/HPE competes for Federal or State contracts, the non-compete not withstanding. Of course, all options are on the table, according to him, so once the non-compete period has expired anything and everything is possible.

Anonymous said...

Why hasn't Mikey been sacked? Or let go? Or whatever is needed to get rid of Chairpersons?
In 2012, at Aldershot's Royal Pavilion, he introduced himeself, with accompanying perma-smile, on how he would turn the company around - consolidation of products, streamlined processes, more aligned organisation, etc etc. We all clapped - a leader with a vision who would lead us out of the desert to the Promised Land.
Four years later, many redundancies later, professional careers destroyed, a shrunken company by any measure, many many "A Message from ..." eMails, he is still around like a drunk in a childrens' playground who has no concept of the human misery he is causing to his employees (his most important resource he let it be known!), let alone the damage he (and his L2s) have caused to a once highly respected company by those who mattered (e.g. clients, industry analysts, competitors).

Why is this donkey still in control?

I arrived in early at Kings Cross office shortly after 07:00 and rarely before 19:00, where 60 and 70 hour weeks were the norm, to meet impossible deadlines, just help our Glorious Leader get this company out of the mess; and I am not an exception. But no more. I have since taken VR and am looking elsewhere, not too hard I would say but enjoying the summer mornings and evenings rather than being the loyal employee who is CLEARly unrewarded for the effort.

Anonymous said...

> Why is this donkey still in control?

Because he chairs the remuneration committee and awards pay rises & options to the non-exec directors and L2's. The people who could/should oust him have a personal vested financial interest in keeping him.

Unknown said...

The "donkey" is still in control, because he has produced the results for the shareholders. That is all that keeps a CEO in his seat (or unseats him). Employees are just a necessary evil who must be tolerated. No more, no less.
From the last several quarterly briefings it is clear that the get fit phase is long over, CSC is making profit and is probably well into the grow phase (to borrow Mike's terminology). However, the saga of axing, chopping and changing is still in full blow. The saga of littl or no increments is still in full blow. All of that is simply to increase the share price even more, every day.

Anonymous said...

If we're borrowing Mikeys terminology, the axing/chopping/changing was the Get Fit phase. Far from being long over, they never moved on from it to the Grow phase.

Anonymous said...

$1 Billion in efficiencies has to be realised by 31 March 2017 as part of the CSC-HPE merge.
Hold on tight, the next 3 months will be the worst CSC staff will ever observe.

Anonymous said...

"the worst CSC staff have seen SO FAR" is probably truer.

Anonymous said...

You're right, SO FAR is better wording for it.

Anonymous said...

Ex-CSCer here (cut in 2014 in US). CSC/CSRA is making a buy-out offer to employees who were in the (frozen) pension plan. Maybe this is part of that $1B in efficiencies someone remarked on earlier. Have to reply by October 28.

Anonymous said...

Email out yesterday regarding the FY16 compensation .... as expected nothing for the majority as they had to make sure Mikey and his merry men were looked after. Do these people actually believe this rubbish they put out or just not prepared to go against the Great Leader.

Dear Colleague

Pay for performance is a critical component in turning around and driving high performing businesses and a must for our shareholders. Many of our competitors have chosen to replace annual merit programmes with other compensation tools to retain talent. These include investment in training to reskill and transform the workforce to drive better results.

The UK&I region fell short of its targets and, as a result, our Incentive Compensation Plan (ICP) corporate payment thresholds were not met. Therefore, there will be no FY16 ICP payments for CSC plan participants in the region. Also, as discussed at our Town Hall sessions and with your line managers, there will be no salary increases during the current fiscal year.

However, we have a targeted retention program in place that addresses select key salary corrective actions to ensure we possess the critical skills needed to best serve our clients. We will continue to focus on our performance culture; developing and evaluating key talent, providing opportunities for promotions, and making salary adjustments as appropriate.

Our goals need to be focused on driving revenue and reducing costs which will help the UK&I region regain its footing for the future.

As a leadership team we recognise we need to improve on our timeliness of communications and we are committed to doing this. Together we must keep the lines of communication open to gain insights on CSC’s continuing investments in our people and the company, building on existing client relationships, generating new business, and preparing for the proposed merger with HPE-ES.

I want to thank you for your continued focus and passion in helping to grow the UK&I region. Remember … together we can drive growth and success in the region.

Anonymous said...

Another patronising communication from the poor CSC management. If I still worked at CSC that would be what 5 years with no pay rise for those that do the work.
To anyone who is left at CSC - leave as soon as you can - you deserve better treatment than CSC will ever give you - good companies are out there in bucket loads.
Drive CSC growth - who are they kidding - drive Mikey's share price and bonuses while your family share the stress and low pay....

Anonymous said...

"However, we have a targeted retention program in place that addresses select key salary corrective actions to ensure we possess the critical skills needed to best serve our clients"

So YOU WILL GET a PAYRISE if meet the criteria below:

1) Management (senior) NOT team leaders
2) Currently overpaid (e.g. management)
3) Brown noser
4) Sycophant
5) Screwed your department over or other departments so much that seen as high potential for future "get fit" program leads and have no heart so happy to cull as requested
6) Support a UK account from abroad where job market is very active (this is not based on merit, skills - purely on retaining cheap headcounts with better profit margins)

Anonymous said...

Further cuts just announced to ensure Mikey and his men get their bonus although this seems to be focused on sales and management tier for now.

Dear Colleagues:

Our UK&I business is facing continued challenges to meet the required level of Operating Income to drive the business forward. As such we have looked again at actions which can be taken to transform our business and reduce costs to improve our profitability. In doing so, we have identified the following areas which require further attention:
• reduce our sales costs
• address a level of over-capacity in our sales force, further cost challenges and over-capacity in areas within our delivery organisations;
• where there is over-capacity, reduce leadership and senior management positions; and
• increasing non-billable management span of control and improve utilisation.

To respond to these challenges, we have identified up to 98 roles that potentially could be removed from the UK&I organisation. Therefore, we have begun consultation about these proposals and the potential impact on our workforce with representatives from the UK Employee Forum, Unite and other recognised trade unions. In addition, we will consult with our workforce in Ireland if necessary. As these discussions proceed we will share as much information as possible using our Regional Transformation Programme C3 space

Next steps are to have further consultation meetings in the coming weeks to determine the most appropriate way to achieve these reductions, and then advise those impacted.

Updates will be posted on the FY17 Regional Transformation C3 space as the programme progresses.

We will continue to provide you with updates about the next phases of our transformation, and what this means to you and your area of the business.

Regards,

Craig Wilson
Regional General Manager, CSC UKIN

Anonymous said...

Sales... CSC and HPE... do not need two lots of sales teams in a merged company...

Still.. good to see some middle level fat cats get the boot... they probably chose a fair few forced leavers over the years... karma...

Anonymous said...

"over-capacity in areas within our delivery organisations" sounds more likely.

They just mentioned management to try to distract you.

Anonymous said...

As far as I am aware, they haven't begun the de-duplication of staff for the HPE merger yet. All of the firings you see now (and in HPE) are not anything to do with that yet, they are just to massage figures for FY17 quarterly or full year bonus payouts for senior management.

Oh, sorry, I meant, "continue to meet operational challenges"

No, the CSC-HPE bloodbath will come from April 2017...

Anonymous said...

Seems more of pre-bloodbath hors d'oeuvre. All part of the same menu.

Yes, FY17 result affects bonus for the bigwigs, but also CSC/HPE-ES FY17 results affect the terms of the 50/50 merger.

Anonymous said...

UK - another 100 jobs to go... http://www.theregister.co.uk/2016/09/19/csc_98_jobs_cut_layoffs_redundancy/

Unknown said...

Anyone have any information on the impending close-down of HQ in Wiesbaden, Germany?

Anonymous said...

Just this link: http://www.wiesbadener-kurier.de/lokales/wiesbaden/nachrichten-wiesbaden/it-beratung-csc-loest-deutschlandsitz-in-wiesbaden-auf-700-mitarbeiter-betroffen_17323455.htm

Anonymous said...

R. I. P.

Anonymous said...

500 out of 1600 employees in Germany will be layed off. Many more will leave voluntarily. Managing director unable to answer employees' questions.

Anonymous said...

You could even try the word from the horses mouth:

http://www.csc.com/de/press_releases/138718-csc_in_deutschland_stellt_sein_geschaeft_neu_auf_und_schafft_die_basis_fuer_kuenftiges_wachstum

Anonymous said...

Surprised the works council have let that happen. I thought this kind of thing was impossible in Germany?

Anonymous said...

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

Anon said...

Managing Director has never been able to answer questions.

Anonymous said...

25 Sept 9.30
Shame on you. What comparison are you trying to make? Keep your act together.

Anonymous said...

Well said, I was also dismayed at the irreverent quote.

Anonymous said...

About time.. uk staff had enough saving netherlands france and germany CSC

Anonymous said...

He Nigel Garage, didn't know you were on this blog. Sounds a lot like your brexit propaganda.

Last two are not part of your region. And the same could be said by our former colleagues, now csra.

But hey, if you can blame somebody else ...

Anonymous said...

The Pale Rider came to town

Jim Bob said...
This comment has been removed by the author.