Computer Sciences Corp. (CSC) exceeded Wall Street's earnings and revenue expectations in its fiscal 2004 second quarter, helped in part by strong sales to the U.S. federal government, a core business for the IT services provider.
CSC on Tuesday reported net income of US$108.1 million, or $0.57 per share, during the quarter ending Oct. 3. Excluding an acquisition-related charge of $5.7 million after taxes, the company posted earnings of $0.60 per share, exceeding by a penny the consensus expectation of financial analysts polled by Thomson First Call, which also excluded the charge.
Revenue came in at $3.59 billion, slightly above analysts' consensus expectations of $3.51 billion, the El Segundo, California, company said.
Compared with last year's second quarter, net income grew 16 percent and revenue rose 32 percent.
CSC's acquisition of DynCorp, which closed in March, boosted the company's U.S. federal government revenue, which almost doubled to $1.52 billion compared with last year's second quarter. CSC expects its sales to the U.S. federal government to continue being strong in the short term, especially to the Department of Defense.
All other revenue not generated by U.S. federal government sales grew 6.3 percent to $2.07 billion. Within this segment, U.S. revenue fell 1.9 percent, while European revenue rose 21.1 percent.
The quarter's $0.03 after-tax charge was related to equipment write-off and exiting of facilities from the DynCorp acquisition. CSC expects to recognize more charges related to the DynCorp acquisition in coming quarters. Those upcoming charges aren't expected to exceed $7 million.
CSC expects to close the third quarter, which ends on Jan. 2, with revenue of about $3.6 billion and earnings per share in the $0.68 to $0.70 range, excluding special charges related to the DynCorp acquisition.
Wall Street seems to be responding well to the earnings announcement, which was made Tuesday after the New York markets closed. The company's stock (CSC) was up 7.6 percent to $43.89 in midafternoon trading on Wednesday on the New York Stock Exchange.