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Who Will Buy CSC? IT Services Vendor Puts Itself On The Block, Plans To Cut 5,000 Jobs
The subject of rumors for months, Computer Sciences Corp. is exploring "strategic alternatives to enhance shareholder value, including a potential sale of the company."
April 4, 2006
2 Min Read
Computer Sciences Corp. on Tuesday said it was putting itself up for sale. The company, which specializes in providing IT and business outsourcing services to government and commercial customers, also disclosed plans to cut 5,000 jobs over the next two years.
In a statement, CSC said it has "decided to explore strategic alternatives to enhance shareholder value, including a potential sale of the company." Rumors of a sale have been circulating for the past several months. A number of private equity firms, including Blackstone Group, Texas Pacific Group, and Warburg Pincus, have reportedly shown interest, as have Lockheed Martin and Hewlett-Packard. CSC said it won't comment on the status of talks "unless and until the board of directors has approved a specific transaction."
Some analysts have cautioned that any buyout of CSC that's heavily reliant on borrowed funds could scare off commercial customers. CIOs, the thinking goes, might be hesitant to hand off key operations to a service provider that's significantly burdened with debt.
The federal government will likely closely monitor any transaction involving CSC. The company holds billions of dollars in sensitive defense contracts, including one to support the Naval Surface Warfare Center in Corona, Calif., and another to help operate the Keesler Air Force Air Education Command Center in Mississippi. CSC also has a contract to help U.S. forces in Iraq detect and disable roadside bombs.
CSC, which posted a profit of $810 million on sales of $14.06 billion in 2005, is also looking to shore up its balance sheet by trimming staff. The company said it will cut 4,300 positions over the next 12 months and an additional 700 in the following fiscal year. Most of the cuts will come in Europe, CSC said. The company currently employs about 80,000 workers worldwide.
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