NEW YORK—Information technology company Computer Sciences Corp. reports earnings for its fiscal fourth quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: CSC won some significant contacts during the quarter amid concerns about an information technology downturn.
In February, CSC was awarded a $211 million Air Force contract to provide aviation maintenance support. In March, it won a $110 million supply contract from the Environmental Protection Agency and in May it signed a $413 million contract with Danish telecommunications company TDC.
CSC ended the quarter with the launch of a unit supplying information technology to the health care industry. The company said on the same day that it won federal contracts during the quarter that totaled $914 million, if all options are exercised.
Shortly after the quarter ended, Hewlett Packard Co. said it would buy out CSC competitor Electronic Data Systems Corp.
BY THE NUMBERS: CSC said in February that it expects profit of $1.33 to $1.43 per share, excluding one-time costs and gains. It also forecast sales in the range of $4.2 billion to $4.5 billion.
Analysts polled by Thomson Financial expect profit of $1.39 per share on revenue of $4.43 billion. Analysts typically exclude one-time items. from their estimates
ANALYST TAKE: Jefferies & Co. analyst Joseph A. Vafi said he is not expecting any big surprises this quarter. "CSC is a pretty steady, long-term, slow-growth business at this point," he said in an interview.
"It had some good contracts during the quarter, but these are really expected in the normal course of business. It would take a mega-deal to really catch people's attention," he said.
Vafi said Hewlett-Packard's acquisition of Electronic Data Systems will be of major interest to analysts.
Wall Street is hoping that the CSC's guidance will reflect uncertainty surrounding EDS's near-term future. "There is an opportunity as some EDS customers may look elsewhere in the short-term," Vafi said.
WHAT'S AHEAD: CSC has all but abandoned its search for a prospective buyer, which a major theme last year. Instead, analysts will be watching CSC's response to Hewlett Packard's buyout of EDS. Wall Street will also be watching for signs of weakness amid economic uncertainty.
STOCK PERFORMANCE: Shares of the Falls Church, Va.-based company fell 17.5 percent in the second quarter to end at $40.79. They closed Monday's session at $46.71.
