CSC's Q3 revenue slips, but profit is up sharply

IT services provider Computer Sciences Corp. (CSC) reported significantly higher profits for its 2003 third fiscal quarter, but its revenue dropped, the company said Tuesday after the close of the financial markets in New York.

CSC had net income of US$105.7 million, or $0.61 per share, up from 2002's third fiscal quarter, when it reported net income of $87.1 million, or $0.51 per share. However, revenue slid 3.5 percent to $2.79 billion in the quarter, which ended on Dec. 27, 2002.

CSC topped by a penny the consensus expectation from 20 financial analysts polled by Thomson Financial/First Call for its earnings per share. But it missed their consensus revenue forecast of $2.9 billion.

Profits grew thanks to CSC's sales of consulting and systems integration services in North America, sales in general to the U.S. federal government and ongoing cost-reduction efforts, the company said. On the flip side, demand for the company's services continues to be soft outside of North America, it said.

Looking ahead, CSC expects its 2003 fourth fiscal quarter earnings per share to be in the mid-90 cent range and its revenue to drop between 2 percent and 4 percent compared with that of 2002's fourth fiscal quarter. That estimate excludes any contributions to revenue from DynCorp, a company CSC is in the process of acquiring.

Moreover, CSC expects its 2004 fiscal year revenue to rise about 25 percent to about $14.5 billion, an estimate that includes the expected additional revenue from DynCorp. In the 12 months ended Sept. 26, 2002, DynCorp had $2.3 billion in revenue and 23,000 employees.

CSC announced the DynCorp acquisition in mid-December and valued it at about $950 million. The acquisition is aimed at beefing up CSC's business with the U.S. federal government and is expected to close during the first calendar quarter of 2003.

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