Computer Sciences Corp. (CSC) lowered its outlook for the year again as it integrated the anticipated effects from a memorandum of understanding it expects to reach with the U.K. National Health Service.
Shares in the provider of information-technology services fell 9% to $45.99 after hours. Through the close, the stock had fallen 3.5% over the 52 weeks.
"After several months of detailed discussions we're now in the final stages of concluding this agreement and moving on to a new era of certainty and partnership with the U.K. government," Chairman and Chief Executive Michael W. Laphen. He said the company would help the U.K. "deliver more efficient and secure public services."
The company cut its earnings target to $4.75 a share from February's $5.20 a share because of a reduction in contract profit. It lowered its revenue outlook to $16.1 billion from $16.2 billion.
Computer Sciences said the guidance reductions were driven by the anticipated memorandum, as well as a related milestone revenue shift and a slightly higher tax rate.
Its February guidance excluded any effects from the National Health memorandum discussions. That guidance itself was a reduction because of a slowdown in government contracts.
Previously, the Virginia-based company has benefited from increased IT outsourcing, but its reliance on government contracting has hurt it lately because of delays in award decisions by the U.S. federal government.
In its latest quarterly results, Computer Sciences Corp.'s earnings rose 15% on a tax benefit.
--By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; firstname.lastname@example.org