CSC Profit Tops Estimate; To Split Into Two

(RTTNews) - Information technology services provider Computer Sciences Corp (CSC) said Tuesday after the markets closed that its fourth quarter profit fell sharply from last year, due to lower revenue as well as hefty pension-related and restructuring charges.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell shy of analysts' forecast.

Separately, Computer Sciences said that it plans to split itself into two publicly traded companies: one to serve commercial and government clients globally and one to serve public sector clients in the U.S.

CSC - Global Commercial will provide IT services and solutions to Fortune 1,000 companies and non-U.S. government clients. With $8.1 billion in fiscal 2015 revenue, CSC Global Commercial will have more than 1,000 customers, including 175 of the Fortune 500, 51,000 employees and 34 delivery centers globally.

CSC - U.S. Public Sector will be a top three provider of mission-specific IT, infrastructure and business services to U.S. federal, state and defense agencies. The public sector business had fiscal 2015 revenues of $4.1 billion and employs 14,000 people.

The Falls Church, Virginia-based company said it plans to pay a special cash dividend of $10.50 per share at the completion of the split-up, which is expected by October 2015.

"CSC began its turnaround three years go," said Computer Sciences CEO Mike Lawrie. "That turnaround has progressed strongly, and our focus now turns to positioning the business for long-term growth and leadership. The best way to accelerate that transformation is by separating the company into two businesses, each uniquely positioned to lead its market by focusing strongly on the needs of its clients."

Computer Sciences shares are currently gaining 4.80% in after hours trading after closing the day's regular trading session at $67.66, down 61 cents. The shares trade in a 52-week range of $54.23 to $73.29.

For the fourth quarter ended April 3, 2015, the company reported net income of $9 million or $0.06 per share, compared to $270 million or $1.81 per share for the year-ago quarter.

Excluding items, adjusted earnings for the latest quarter was $1.26 per share.

On average, 16 analysts polled by Thomson Reuters expected the company to earn $1.20 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Revenue for the fourth quarter fell 12.6% to $2.91 billion from $3.33 billion in the same quarter last year. Fourteen analysts had a consensus revenue estimate of $2.96 billion for the fourth quarter.

For the fourth quarter, the company's global business services revenue fell 14.9% to $980 million, while its global infrastructure services revenue dropped 20.8% to $929 million. North American public sector revenue for the quarter declined 0.4% to $1.0 billion.

Computer Sciences has been under pressure from activist investor Jana Partners LLC, which held talks with the company earlier this year about potential strategic alternatives.