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CSC Third Quarter Results Beat Estimates

Outsourcer posts earnings gain, but revenue and net income decline.
Shares of Computer Sciences Corp. were up slightly in early trading Wednesday after the outsourcer on Tuesday reported third-quarter financial results that surpassed analysts' expectations.

For the three months ended Jan. 2, CSC said earnings per share rose about 1% year over year to $1.06. Wall Street analysts polled by Thomson Reuters were, on average, expecting the company to post EPS of $1.02.

"We are pleased with our progress in the third quarter," said CSC chairman and CEO Michael Laphen, in a statement. "These results reflect the company's intensified focus on financial discipline, cost control, and cash management."

Still, the recession took its toll on CSC's top and bottom lines during the quarter. Revenue fell 5% compared with the same period a year ago, to $3.95 billion. Net income dropped 10%, to $160.6 million. The company also lowered guidance for its full-year results. It now expects full-year sales of about $16.8 billion and full-year EPS of $6.30. The figures represent the low end of previous guidance issued by CSC.

CSC said it booked $2.7 billion in new business contracts in the third quarter, with about $1.2 billion coming from government deals in North America.

On an industry basis, the best performance came from the company's health care practice, where revenue was up 17%. Like other outsourcers, CSC stands to benefit from the Obama administration's push to digitize U.S. health care records. The president has said he wants to see e-health records for every American implemented within five years.

CSC shares were up 1.41% to $39.49 in opening trading Wednesday as the markets rebounded from Tuesday's sharp sell-off.