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Tech Industry

CSC posts 3Q profits in line with estimates

Computer Sciences (NYSE: CSC) met analyst estimates in the third quarter.

After market close Monday, the technology services firm reported fiscal third quarter earnings of $112.1 million, or 66 cents per share, before non-recurring charges. That was on target with the consensus forecast from First Call's survey of 15 analysts.

CSC incurred merger-related costs of $29.8 million, or 18 cents per share, after taxes. Including those expenses, CSC earned $82.3 million, or 48 cents per share.

Shares of CSC rose 2 5/8 to 91 7/8 The stock has gained almost 60 percent in the last three months.

"These results look fine," Merrill Lynch analyst Scott McLellan told Reuters. "These service companies tend to be pretty consistent. New bookings are very robust."

Third quarter revenue increased 14.9 percent year-over-year to $2.4 billion. International revenue outpaced U.S. business growth, 17.4 percent to 10.7 percent. U.S. government revenue rose 7 percent year-over-year to $543.8 million.

"We are pleased with this quarter's excellent performance given the dramatic demand shifts for information technology services during the latter months of calendar 1999," said Van B. Honeycutt, chairman, president and CEO of CSC.

Honeycutt credited recent contract wins and "aggressive cost containment" for fueling CSC's bottom line. The company announced $3.5 billion of contracts in the third quarter, with $9.6 billion for the fiscal year so far. CSC had $5.1 billion in contract awards for the entire fiscal 1999.

Revenue from the third quarter contracts will start in the fourth quarter, Honeycutt said.

Among 16 analysts polled by Zack's Investment Research, nine analysts have the equivalent of "moderate buy" ratings on CSC, five recommend it as a "strong buy", and two maintain "hold" advisories on the stock.>