CSC's (CSC) fiscal fourth-quarter earnings fell 43% absent a prior-year tax benefit as the information-technology services company reported stronger sales.
Chairman and Chief Executive Michael Laphen said the company is poised for a return to growth in the just-started fiscal year. It anticipates a profit of $5.30 to $5.40 a share on revenue of $16.8 billion to $17.2 billion, while analysts polled by Thomson Reuters recently projected $5.21 and $16.96 billion, respectively.
The company has benefited from increasing outsourcing of IT services and continued to add new contracts during the quarter. Recurring revenue from long-term contracts also has help CSC post solid earnings as IT spending slumped. It added $4.3 billion in new business bookings during the quarter, led by its managed-services segment, which accounted for nearly half the amount.
For the quarter ended April 2, CSC reported a profit of $259 million, or $1.66 a share, down from $382 million, or $2.51 a share, a year earlier. The prior year included $1.11 of net favorable tax settlements. Revenue increased 3.2% to $4.24 billion.
The company in February projected earnings of $1.37, below analysts' forecasts at the time, on revenue of $4.4 billion, which exceeded analysts' then-estimates.
CSC's managed-services segment, its largest by revenue and which mainly covers government contracts, rose 4.7%. CSC's North American public-sector business had 6.1% growth while the smaller business services and solutions unit posted a decline of 4.1%.
CSC, which had been known as Computer Sciences Corp., changed its name as part of a five-year marketing and advertising campaign.
Shares closed Wednesday at $49.11 and were inactive premarket. The stock is down 15% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com