CSC to Handle Hughes Data Processing : Computers: The $1.3-billion deal is one of the largest of its kind. About 1,100 transfers--no layoffs--are planned.
In one of the largest contracts of its kind, Computer Sciences Corp. said Tuesday that it will handle data-processing services for Hughes Aircraft for $1.3 billion over eight years.
Under the agreement, El Segundo-based CSC will take over a wide range of computer operations--everything from mainframes to telecommunications to desktop computers--that Hughes, also based in El Segundo, once handled in-house. About 1,100 Hughes employees--primarily in Long Beach and Fullerton--will be transferred to CSC once the contract takes effect Jan. 28.
The employees will continue working at Hughes facilities and no layoffs are planned for now, CSC spokeswoman Mary Rhodes said.
“It will be business as usual,” she said. “They will just be wearing CSC badges instead of Hughes badges.”
The agreement is expected to save Hughes, a subsidiary of General Motors Corp., a considerable amount of money on its data-processing operations, while keeping CSC at the forefront of the fast-growing computer services business, industry analysts said. The contract negotiations between Hughes and CSC were reported last month.
“Hughes is setting aggressive goals to stay ahead in a very competitive marketplace, and we’re committed to contributing strong management and technology innovations to help them reach their goals,” CSC President Van B. Honeycutt said in a statement.
In addition to the new $1.3-billion contract, CSC will continue to work for Hughes Missile Systems under a previous contract worth $200 million. CSC also agreed to purchase some of Hughes’ computer equipment and software for an undisclosed price.
CSC shares--which had risen recently as talk of the Hughes contract surfaced--fell 50 cents to $50.50 on the New York Stock Exchange after jumping as high as $52.25 early in the day. GM Hughes shares added 12.5 cents to close at $35 on the NYSE.
The Hughes contract is one of the 10 largest ever awarded to a firm in the computer services field. Among the others are Electronic Data Services, another unit of GM, and International Business Machines, said Stephen T. McClellan at Merrill Lynch Research. Last year, Xerox hired EDS to handle its data-processing operations in a $3.2-billion agreement. EDS did not bid for the Hughes contract.
The field will continue to grow as budget-minded corporations contract with computer services firms to save money and keep abreast of the latest technology, McClellan said. “The market is accelerating and the contracts are getting larger,” he said.
