CSC Reports a $1.39B Loss on Revenue Down 5.8 Percent
Computer Sciences Corp. reported a US$1.39 billion loss for its third fiscal quarter, with revenue down 5.8 percent year on year. Performance was dragged down by a $1.49 billion charge related to the U.K. government's cancellation of a health IT contract, it said Wednesday.
The company posted a profit of $242 million in the same quarter last year. CSC said it would have made a profit on steady revenue in the most recent quarter if it weren't for the charge, which it announced in December. Two of CSC's last four quarters have been blighted by exceptional charges, totaling around a quarter's worth of revenue.
Revenue for the third fiscal quarter totaled $3.76 billion, down 5.8 percent from $4 billion a year earlier. The managed services sector continued to contribute the largest share of that, around 44 percent, with the North American public sector contributing 37 percent and business solutions and services 20 percent.
New business awards during the quarter totaled $4.1 billion, and CSC expressed optimism about its ability to capture new business.
The company also named a new CEO, Mike Lawrie, to replace Michael Laphen, who resigned in October.
However, there was bad news for CSC's Danish business unit: Its biggest private-sector customer there, mobile telecommunications operator TDC, has chosen the Indian company Tata Consultancy Services run its IT services, Computerworld Denmark reported Wednesday.
The company declined to comment further on the outlook for future quarters pending the outcome of negotiations with the U.K. government over the health IT contract. In December, CSC estimated its investment to date in the contract for the U.K. National Health Service at around $1.5 billion, and said it could end up assuming additional costs, pending the outcome of the negotiations.
Other clouds hang over the company's figures. In October it announced that its Danish business unit was the focus of an investigation by the U.S. Securities and Exchange Commission into alleged stock manipulation through fraudulent financial reporting. By November, the investigation had spread to Australia, where the company had discovered internal misconduct and accounting errors, it said.
The company will host a conference call to discuss the financial results later Wednesday.