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    Home IT Management
    • IT Management

    CSC Stock Hurt by Bid to Remain Independent

    By
    Stan Gibson
    -
    July 17, 2006
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      The hope that a $2 billion buyback plan would boost its stock in the wake of a failed bid to find a buyer appears to be in vain, as Computer Sciences shares have failed to rebound in the past two weeks to previous levels.

      On June 29, the El Segundo, Calif. outsourcer and systems integrator announced that its efforts to sell itself to another party were at an end, and that it would purchase 19 percent of its stock with the assistance of Goldman Sachs & Co.

      Acquisition talks had boosted the companys stock price, which then dropped sharply on the announcement that there would be no acquisition.

      News of the buyback buoyed the stock somewhat, but not to previous levels. CSC shares were trading at $50.66 on July, 17. The stocks 52-week high was $60.39, but the price fell to $48 on June 29 when the announcement was made that talks were over.

      “They took themselves off the block and that drove the stock down. The market didnt fall for it. Its a lame alternative to being sold,” said Bob Djurdjevic, president of Annex Research in Phoenix, Ariz.

      “CSC management is tired of running the business. They want to go and play golf. They are out of ideas and out of zeal or zest to run the business. As a result, theyve been trying to sell themselves. But at the price theyre asking, there are no takers,” said Djurdjevic.

      Hewlett-Packard had been discussed as an interested party, according to reports.

      “The decision to repurchase stock concludes the Boards process to explore strategic alternatives, including a potential sale of the company, announced on April 4, 2006,” the company said in a statement.

      /zimages/1/28571.gifClick here to read about CSCs plan to restructure its business.

      The share repurchases show that CSCs board has confidence in CSC as an independent company, the statement continued.

      In addition, the share repurchases will improve the efficiency of CSCs capital structure, lower the cost of capital and increase earnings per share, the company said.

      The company is carrying out a plan to lay off 5,000 workers, which was announced on April 4, 2006.

      /zimages/1/28571.gifCheck out eWEEK.coms for the latest news, reviews and analysis on IT management from CIOInsight.com.

      Stan Gibson
      Stan Gibson is Executive Editor of eWEEK. In addition to taking part in Ziff Davis eSeminars and taking charge of special editorial projects, his columns and editorials appear regularly in both the print and online editions of eWEEK. He is chairman of eWEEK's Editorial Board, which received the 1999 Jesse H. Neal Award of the American Business Press. In ten years at eWEEK, Gibson has served eWEEK (formerly PC Week) as Executive Editor/eBiz Strategies, Deputy News Editor, Networking Editor, Assignment Editor and Department Editor. His Webcast program, 'Take Down,' appeared on Zcast.tv. He has appeared on many radio and television programs including TechTV, CNBC, PBS, WBZ-Boston, WEVD New York and New England Cable News. Gibson has appeared as keynoter at many conferences, including CAMP Expo, Society for Information Management, and the Technology Managers Forum. A 19-year veteran covering information technology, he was previously News Editor at Communications Week and was Software Editor and Systems Editor at Computerworld.

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