CSC Profit Rises 16% on Government Contracts
Computer Sciences Corp.’s profit rose 16% in its fiscal second quarter as an acquisition in March of major government contractor DynCorp nearly doubled sales to federal agencies, the company reported Tuesday.
The El Segundo-based firm said net income increased to $108.1 billion, or 57 cents a share, from $92.9 million, or 54 cents, on revenue that jumped 32% to $3.59 billion.
For the record:
12:00 a.m. Nov. 13, 2003 For The Record
Los Angeles Times Thursday November 13, 2003 Home Edition Main News Part A Page 2 National Desk 3 inches; 115 words Type of Material: Correction
Computer Sciences -- An article in Wednesday’s Business section misstated some elements of Computer Sciences Corp.’s earnings report. The article incorrectly said CSC’s profit in its fiscal second quarter had been $108.1 billion. In fact, it was $108.1 million. The article also incorrectly said the company had attributed most of its profit increase to Defense Department contracts. The company’s chief executive, Van Honeycutt, actually attributed the majority of the increased revenue to all federal contracts. In addition, the article incorrectly reported that excluding contracts won by its DynCorp unit, CSC’s deals with the Defense Department had increased 7%. In fact, it was CSC’s overall revenue from the federal government, excluding DynCorp deals, that rose 7%.
After the company said it was comfortable with Wall Street estimates for the rest of the fiscal year, Computer Sciences shares gained $1.31 in after-hours trading from their close of $40.79, off 16 cents, on the New York Stock Exchange.
Although demand for business integration projects and business services was mixed overall and noticeably weak in Asia and Central Europe, defense work has been better than at any time in the firm’s history. New orders in the last 12 months were double what they had been in the previous 12 months, Chief Executive Van Honeycutt said.
“If you add up the past three quarters and the pipeline ... I think the story adds up to a positive one,” said Louis Miscioscia, an analyst who follows CSC for Lehman Bros.
Computer Sciences got 42% of its fiscal second-quarter revenue from the federal government, up from 28% a year earlier. In the latest quarter, the firm won $3.5 billion in new business, of which 80% was federal.
Honeycutt and other executives attributed the majority of the increased earnings in the three months ended Oct. 3 to contracts from the Defense Department. The company’s non-DynCorp deals with the department increased 7%.
The executives said a $350-million contract set to be awarded in May by the Homeland Security Department should kick off increased funding there as well. CSC is leading one of the three teams bidding for that contract.
In the meantime, nondefense information technology spending by the government is continuing at a “healthy” pace, Honeycutt said. CSC also does Web hosting, outsourcing and software development.
All told, Computer Sciences is in the running for $15 billion in federal contracts in the next six months.
“We are very well positioned,” Honeycutt said.
Miscioscia said the company could benefit as the economy improves and its government contracts are joined by more commercial deals.
“That’s where it starts to really come together,” he said. Lehman Bros. does business with CSC, but Miscioscia doesn’t own shares in the company.
