IT services provider Computer Sciences Corp. increased its net income by 36 percent in the second quarter of its 2003 fiscal year, compared with the same quarter last year, thanks in part to strong sales to the U.S. federal government and to tight internal cost controls.
However, revenue declined slightly, due in part to weak demand from financial services clients and for short-term projects outside North America, particularly in Europe, the company said Tuesday.
The company also lowered its forecast for the full year's earnings per share to a range of between US$2.60 and $2.65 from its previous expectation of between $2.73 and $2.88, a company spokesman said Wednesday. The lower forecast sent CSC's stock's share price tumbling Wednesday. It was down 8 percent in midafternoon trading Wednesday to $30.68. The stock's 52-week high is $53.47.
Net income for the quarter ended Sept. 27 came in at US$92.9 million, or $0.54 per share, meeting the consensus estimate from Wall Street analysts polled by Thomson Financial/First Call. In last year's second fiscal quarter, CSC had net income of $68.2 million, or $0.40 per share.
The quarter closed with $2.7 billion in revenue, down 1.2 percent from last year's second quarter and below the Thomson Financial/First Call consensus estimate of $2.81 billion.
About 75 percent of CSC's revenue came from sales to the U.S. federal government and from global sales of outsourcing services, two markets where the company sees "robust" opportunities. In the quarter, U.S. federal government-derived revenue rose 16.9 percent.
Although global outsourcing sales grew, the company has seen "no significant improvement" in demand for IT consulting and systems integration services in North America.
For the second half of fiscal 2003, CSC expects revenue to grow between 2 percent and 4 percent, the El Segundo, California-based company said.