CSC Profit Doubles on Sale of Units
Computer Sciences Corp., the fifth-largest U.S. computer services company, said fourth-quarter profit more than doubled to $411.8 million because of a gain from the sale of some of its DynCorp International businesses.
Net income was $2.13 a share in the quarter ended April 1, compared with profit from continuing operations of $190.6 million, or $1.01, a year earlier, the El Segundo company said. Sales rose 7.9% to $3.88 billion from $3.59 billion, reflecting the February sale of the DynCorp units.
Computer Sciences sold DynCorp’s security and aircraft maintenance units for $850 million and might use some of its $1.01 billion in cash to make more acquisitions. Chief Executive Van Honeycutt said the company typically got about a third of its growth from buying firms.
“The acquisition pipeline is heating up,” Honeycutt said during a conference call with analysts. Acquisitions might help the company enter new markets, he said. “One thing we’re watching for is a consolidating market.”
The company retained the part of DynCorp that manages computer systems and sold the piece that provides security in Iraq and other war zones.
Computer Sciences Chief Financial Officer Leon Level said the company’s ratio of debt to total capital was the lowest in more than 30 years.
The company said it booked an after-tax gain of $229.5 million, or $1.19 a share, in the latest quarter from the sale of the DynCorp businesses.
Total profit from operations -- including results from discontinued operations and before the gain, a legal settlement and other special items -- was $1.09 a share in the latest period.
The company was expected to earn $1.07 a share, the average estimate of 14 analysts surveyed by Thomson First Call, on sales of $3.77 billion.
The firm’s shares rose 70 cents to $46.48 in extended trading. Earlier they added $1.48 to $45.78 on the New York Stock Exchange. They have fallen 19% this year.
Computer Sciences’ profit is rising as it wins contracts from European and U.S. commercial customers. It agreed Feb. 2 to operate Sun Microsystems Inc.’s internal software systems under a five-year, $360-million order. The company, whose federal government business has cooled, also won a $762-million order to provide services to the Navy’s undersea training bases.
“They seem to be executing better than the other guys like IBM and EDS,” said Joseph Vafi, a Jefferies & Co. analyst.
