2/8/2012 10:01 AM ET
(RTTNews) - Information technology services provider Computer Sciences Corp. (CSC: News ) on Wednesday reported a loss for the third quarter, reflecting a hefty charge relating to a key contract with the UK's National Health Service and another charge related to its BSS-Health reporting unit. Revenues for the quarter also declined.
Further, the company said it will not provide guidance for fiscal year 2012 until discussions with the NHS are completed. The company's shares are currently gaining more than 23 percent in the regular session.
The Falls Church, Virginia-based company's net loss for the third quarter was $1.39 billion or $8.96 per share, compared to net income of $242 million or $1.54 per share in the year-ago period.
The latest quarter's results include a write-down of about $1.49 billion or $9.93 per share related to the company's investment in the NHS contract and a goodwill impairment charge $60 million or $0.39 per share at the company's BSS-Health reporting unit.
Excluding the impact of charges, adjusted earnings for the quarter were $209 million or $1.35 per share. On average, 13 analysts polled by Thomson Reuters expected earnings per share of $0.58. Analysts' estimates typically exclude one-time items.
Revenues for the quarter declined 6 percent to $3.76 billion from $4.00 billion in the same period last year. Analysts had a consensus estimate of $3.98 billion.
Revenues declined year-over-year in North American Public Sector, or NPS by 6 percent and at Business Solutions & Services by 18 percent. Meanwhile, Managed Services Sector revenues edged up 1 percent.
Total costs and expenses soared to $5.20 billion from $3.77 billion in the year-ago quarter. Operating margin for the quarter was negative 34.1 percent, compared to positive 7.4 percent in the prior-year quarter.
New business awards for the quarter totaled $4.1 billion, up 71 percent from last year. On a year-to-date basis, new business awards increased 26 percent to $13 billion.
On December 27, 2011, CSC issued a Form 8-K regarding the NHS contract and withdrew its guidance for fiscal year 2012 pending clarity around the NHS situation. The company said Wednesday that as it continuing talks with the client, it will not provide guidance at the current point of time.
CSC was developing a patient records system as part of the UK NHS IT program and for which it has invested $1.5 billion. Last May, CSC closed most talks on a MOU with the NHS that covered key aspects such as a cut in the scope and related contract value of the NHS IT program agreement. The parties were engaged in further talks last month for more amendments than earlier contemplated in the MOU.
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