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    Home IT Management
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    Outsourcing Keys CSCs Revenue Jump

    By
    Paula Musich
    -
    February 1, 2002
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      Computer Sciences Corp. yesterday reported earnings of 51 cents per share on revenues of $2.9 billion for its third quarter of 2002.

      The El Segundo, Calif., IT consulting and outsourcing firm saw its revenues jump 9 percent over the same quarter last year on the strength of the global commercial IT outsourcing market. For the first time in its history, CSCs outsourcing revenue as a percentage of its total revenues exceeded 50 percent.

      “In the third quarter, over 70 percent of revenue came from long-term outsourcing and federal government activity,” said Chairman and CEO Van B. Honeycutt in the earnings call late yesterday.

      The third quarter included contributions from two large government outsourcing contracts, including the National Security Agency outsourcing contract awarded last year and valued at $2 billion, and the Army Wholesale Logistics Modernization Program valued at $680 million.

      CSC in the third quarter saw $3.2 billion in contract awards between the federal and commercial sectors. The federal government, seemingly untouched by the recession, shows continued promise with an expected pipeline of $21 billion in new business over the next 26 months.

      CSCs net income for the quarter was $87 million, and the global outsourcing and consulting firm managed to boost its margins up a half percent to 3 percent. CSC restructured two outsourcing contracts for better financial performance, and it realigned its consulting and systems integration unit in North America.

      “We have our consulting business right-sized,” said Honeycutt. “Weve been more aggressive in reducing head count in other areas. You will see further head count reductions as needed based on the workload. We think we will have an upturn in the consulting business. Federal business continues to improve, and the cost reductions weve been making will be fully realized in the fourth quarter,” he added.

      For the full year, Honeycutt said that CSC anticipates that its earnings will be in at the lower end of its previously stated guidance of about $2.00 to $2.10 per share, with revenue growth in the lower range of 9 percent to 11 percent.

      Paula Musich

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