Computer Sciences in Service Contract Deal

Bermuda-Global Crossing Ltd., owner of a network for phone calls and Internet traffic, won a 12-year, $700-million contract Thursday to provide service to Computer Sciences Corp.

El Segundo-based Computer Sciences in turn won a $400-million order to run Global Crossing’s 10,000 personal computers and mainframes for 10 years, the companies said. The companies also will jointly market each other’s services in a bid to attract more customers.

The accords will reduce costs, said the companies, which have struggled with a slowdown in spending for telecommunications services and computers.

The news sent shares of Global Crossing, whose market value had fallen by about $24 billion because of waning demand, up 25 cents, or 30%, to $1.07 in heavy trading on the New York Stock Exchange. Computer Sciences rose 15 cents to $44, also on the NYSE. Hamilton, Bermuda-based Global Crossing’s stock has tumbled from a high of $64.25 in May 1999. Shares of Computer Sciences have fallen 38% in the last year. The company has a Beverly Hills headquarters.

“It’s self-serving for both parties,” because they both save money, said Guzman & Co. analyst Patrick Comack, who has a “neutral” rating on Global Crossing shares and doesn’t own them.

Computer Sciences will use Global Crossing to help carry phone calls, e-mail and data between 1,500 company’s offices.

Both companies have been reducing costs, including firing workers, to cope with sluggish demand.

“One of the reasons this deal was attractive to Computer Sciences was that we saw a clear opportunity to reduce costs,” said spokesman Mike Dickerson. He said the company won’t disclose how much money it will save by hiring Global Crossing.

About 300 of Global Crossing’s workers, or 3% of the staff, will transfer to Computer Sciences by March 31, said spokeswoman Madelyn Smith. She wouldn’t say how much money Global Crossing, which employs 10,000, will save with the contract.