CSC Shares Dip on Reduced Outlook
Computer Sciences Corp. on Wednesday reported a 21% jump in third-quarter profit, but a weaker-than-expected forecast for fourth-quarter results sent the company’s stock down more than 5% in after-hours trading.
Chief Executive Van Honeycutt said the technology services and defense contracting firm expected earnings per share of 98 cents to $1.02 as revenue growth slows to 20% to 30%. The consensus of analysts polled by Thomson First Call had been fourth-quarter earnings of $1.02 a share.
Shares of the El Segundo company rose 45 cents to $46.62 in regular trading on the New York Stock Exchange after touching a 52-week high of $47. After the earnings and forecast were released, the stock fell as low as $43.95.
Analyst John Jones of SoundView Technologies Group said the slide was due partly to the reduced fourth-quarter outlook.
In addition, he said, investors “wanted a more definitive set of outlooks. The company’s got booming bookings, and they’re not ready to talk about fiscal ’05.”
For the three months ended Jan. 2, CSC said, sales rose 30% to $3.62 billion from $2.79 billion in the third quarter a year earlier. Quarterly profit increased to $128 million, or 68 cents a share, from $106 million, or 61 cents, a year earlier.
Revenue from the U.S. government jumped 84% to $1.46 billion, aided by the acquisition of DynCorp in March 2003. U.S. commercial revenue dropped 4.9% to $922 million as some contracts ended. European sales improved 23% to $933 million but would have increased just 6% without currency fluctuations.
Defense contracting remained strong, more than doubling from a year earlier. Honeycutt said overall demand for outsourced commercial services continued to be firm.
But he said revenue from those services was expected “to vary depending on geographic market conditions and specific customer needs.”
During the latest quarter, Computer Sciences announced a record $6 billion in new contracts, much of which would be spread over years.
The company said it was in the running for almost $23 billion in contracts that would be awarded in the fiscal year beginning in April.
