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1/31/2002
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CSC, KPMG Have Profitable Quarters

Computer Sciences Corp.'s income and revenue increased in the third quarter. KPMG Consulting's second-quarter revenue was down, but its net income was $6.6 million, compared with a loss of $37.6 million a year ago.

Computer Sciences Corp. Thursday reported increases in both income and revenue for its third fiscal quarter of 2002, ended Dec. 28. Net income was $87.1 million, up from $65.6 million during the third quarter of 2001. Revenue was $2.90 billion, up almost 9% from the $2.66 billion reported in the same quarter last year.

CSC's growth was driven primarily by a healthy market for outsourcing in both the commercial and the U.S. government sectors. Commercial outsourcing revenue grew 7.2%, to $2.2 billion compared with $2.0 billion in last year's third quarter. Revenue derived from CSC's U.S. government activities increased to $737.5 million, up 13.9% from the $647.5 million recorded in last year's third quarter. During the quarter, CSC received a five-year, $1.1 billion extension on an outsourcing contract with United Technologies Corp. CSC chairman and CEO Van Honeycutt says that his company also continues to provide business-process outsourcing services for Enron and continues to be paid for those services.

CSC competitor KPMG Consulting Inc. Thursday reported mixed financials for its second fiscal quarter of 2002. Revenue was down about 21% to $554.8 million, but net income was $6.6 million, compared with a loss of $37.6 million a year ago.

CSC continues to rely more heavily on outsourcing than systems integration or management consulting for revenue. KPMG Consulting, however, relies more on systems integration and consulting for its business. Systems-integration firms, like the software providers they rely on, are acknowledging a slowdown in demand but, unlike software firms, aren't seeing signs of a recovery, according to Lehman Brothers analyst Karl Keirstead.

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