Information technology services provider Computer Sciences Corp. (CSC: Quote) on Wednesday reported a 78 percent fall in profit for the first quarter from last year on lower revenues, while the prior-year period's results included a one-time tax benefit. Nevertheless, both earnings and revenues beat analysts' estimates.
Mike Lawrie, president and CEO of CSC said, "Our first quarter performance reflects a first step in turning around CSC. While there is significant work ahead of us, I am pleased with our initial progress on operating margins and free cash flow."
CSC said it will focus on greater contract management discipline across the company and simplify its operating model to realize greater productivity and operational efficiency. The company expects to realize about $1 billion in cost improvement over the next 18 months.
Falls Church, Virginia-based CSC's net income for the first quarter was $40 million or $0.26 per share, down from $183 million or $1.17 per share in the prior-year quarter. The prior-year quarter's results include a one-time tax benefit of about $0.78 per share.
On average, twelve analysts polled by Thomson Reuters expected the company to earn $0.22 per share for the quarter. Analysts' estimates typically exclude one-time items.
Revenues for the quarter declined 2 percent, but increased 1 percent in constant currency, to $3.96 billion from $4.03 billion in the prior-year period. Analysts had a consensus revenue estimate of $3.89 billion.
Revenues declined in North American public sector by 8 percent to $1.37 billion, while managed services sector revenues rose by 1 percent or 5 percent in constant currency to $1.64 billion. Business solutions & services revenues grew 2 percent or 7 percent in constant currency to $0.99 billion.
New business awards for the quarter totaled $4 billion. Managed Services sector reported $2.2 billion of the new business.
CSC closed Tuesday's trading at $25.52. In Wednesday's pre-market, the stock is adding $0.80 or 3.13 percent to $26.32.
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by RTT Staff Writer
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