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Government Spending Boosts CSC's Earnings

Sales in Europe and to the U.S. government drove double-digit growth in net income.
Computer Sciences Corp. says strong European sales and increased spending by the federal government helped it post double-digit increases in net income and earnings per share for its fiscal first quarter.

CSC, the third-largest IT services vendor, said Tuesday that net income increased 19% year-over-year to $110.4 million during the three months ended July 2. Per-share earnings rose 18% to 58 cents while revenue jumped 5.1% to $3.7 billion.

For the period, CSC's sales of IT and consulting services to the federal government rose 5% to $1.58 billion while sales to commercial customers in the United States decreased 2.8% to $911.6 million. But sales in Europe jumped sharply, rising 14.8% to 940.1 million. The value of new contracts secured by CSC in its first quarter totaled $4.9 billion, including a $1.6 billion, 10-year deal to provide outsourcing services to Sears, Roebuck and Co.

Looking ahead, CSC officials said they expect revenue growth between 7% and 9% in the second quarter and are "comfortable" with analysts' earnings-per-share estimates of between 63 cents and 68 cents.