Outsourcers Hit With Options Woes - InformationWeek
Business & Finance
03:49 PM
[Dark Reading Crash Course] Finding & Fixing Application Security Vulnerabilitie
Sep 14, 2017
Hear from a top applications security expert as he discusses key practices for scanning and securi ...Read More>>

Outsourcers Hit With Options Woes

CSC and ACS are delaying filing full quarterly financial reports because of internal investigations into the backdating of executive stock options.

Outsourcing vendors Computer Sciences Corp. and Affiliated Computer Services last week said they would delay filing full 10-Q quarterly financial reports with the Securities and Exchange Commission because of internal investigations into the backdating of executive stock options.

ACS said revenues for its fiscal first quarter increased 6% to $1.39 billion, while earnings per share fell 19% to $0.60. For its part, CSC reported that second quarter revenue was flat at $3.61 billion, while earnings per share were also flat year-over-year at $0.53. Both companies cautioned that those numbers could change once the internal reviews are complete.

CSC and ACS are the latest tech companies to be hit by an options scandal. The SEC and corporate watchdogs have accused executives at a number of large companies of intentionally backdating the purchase price of stock options to coincide with lows in their companies' share prices, a move that would allow them to realize maximum gains when the options are realized.

Last month, McAfee chairman and CEO George Samenuk resigned after the company found discrepancies in his stock option grants. Also in October, Monster.com chairman Andrew McKelvey stepped down because of an options probe, as did Shelby Bonnie, CEO of CNet Networks. Apple Computer has also acknowledged that CEO Steve Jobs was aware that some of his options had been backdated. But an internal board cleared Jobs of any wrongdoing, in part because he didn't realize any financial benefit from the backdating, Apple said.

Executive casualties at ACS or CSC because of options backdating could have a greater impact on those companies' sales prospects than would similar incidents at vendors that focus purely on selling products. Outsourcers typically engage in long-term relationships with customers and, as a result, their customers place a high priority on management stability. Both ACS and CSC also perform highly sensitive work for the federal government.

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll