Computer Sciences Profit Soars On Lower Costs, Again Lifts Outlook; Stock Up

(RTTNews) - IT service provider Computer Sciences Corp. (CSC), said Tuesday its first-quarter profit almost tripled, driven mostly by lower costs, offsetting a 10 percent decline in revenues amid stiff competition and the weakness in Europe.

Looking ahead to the full year 2014, the company once again lifted its expectations, sending its shares up 6 percent in after-hours trade on the New York Stock Exchange.

"We are encouraged with the pace of our turnaround. Our cost takeout actions are driving margin expansion and earnings growth," said CEO Mike Lawrie.

The Falls Church, Virginia-based company posted first-quarter net income of $159 million or $1.02 per share, compared with $42 million or $0.26 per share in the prior year.

Results for the quarter included a discontinued-operations gain of $0.11 per share, compared with a gain of $0.16 per share a year ago.

On average, 11 analysts polled by Thomson Reuters estimated earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter slid 10.3 percent to $3.26 billion from $3.63 billion last year. Ten analysts had a consensus revenue estimate of $3.57 billion for the quarter.

Computer Sciences offers a range of business solutions including application services, big data analytics, consulting, Cloud solutions, cyber security.

During the quarter, revenue from Global Business Services segment slid 15.3 percent, due mainly to the divestment of the IT staffing business. New business awards for the segment were $1.2 billion in the quarter.

Revenue from Global Infrastructure Services segment fell 4.4 percent due to contract conclusions and contract scope changes in Europe. The segment saw new business awards of $900 million.

Revenue from North American Public Sector segment declined 11 percent due to a reduction in professional services at the Department of Defense and other government agencies.

The drop in revenue was offset by operating margin that expanded to 9.3 percent from 4 percent last year. Expenses were lower at $3 billion, compared with $3.6 billion a year ago.

For fiscal 2014, the company now expect earnings from continuing operations in the range of $3.50 to $3.70 per share, up from its prior guidance $3.30 to $3.50 per share. Analysts currently expect earnings of $3.52 per share.

Separately, Computer Sciences signed a strategic alliance with AT&T Inc. (T) to develop next-gen technology and cloud solutions for enterprise businesses. The deal will remain in place at least until 2020.

In May, Computer Sciences agreed to sell Applied Technology Division - the company's base operations, aviation and range services business - for $175 million.

The company's stock closed Tuesday at $49.96, down $0.23 or 0.46%, on a volume of about 1.4 million shares. In after hours, the stock gained $3.14 or 6.29%.