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Computer Sciences: Our sales set to jump

The IT services company says its buyout of fellow provider DynCorp and its growing muscle in the government market will spur a 25 percent rise in sales next year.

Computer Sciences is predicting its sales will rise by more than a quarter next year, spurred by its buyout of a fellow information technology services provider and its growing muscle in the government market.

The El Segundo, Calif.-based company forecast on Wednesday revenue growth of more than 25 percent, to fiscal year 2004 sales of over $14.5 billion. It attributed its sunny outlook to its pending acquisition of DynCorp and its expectation of a stronger presence in the growing federal government market.

"The combined federal business will solidify CSC's position as a top 10 government contractor to both civil and defense agencies," CEO Van Honeycutt said in a statement. "The federal budget for the government's fiscal 2003 is up materially from last year, and the DOD (Department of Defense) budget shows the largest increase in about 20 years."

Upon completion of the DynCorp merger, Computer Sciences estimates it will rake in about $6 billion in annual revenue from the federal government for fiscal year 2003, ending in March, and have nearly 38,000 people serving the U.S. government globally.

The government sector has attracted more interest from technology companies amid flagging IT spending by businesses and amid growing government IT budgets in the wake of the Sept. 11 terrorist attacks. The Bush administration has proposed spending $59.1 billion on information technology in federal fiscal year 2004, an increase of just over 12 percent from the previous year.

In December, Computer Sciences said it would buy DynCorp in a deal valued at about $950 million. DynCorp, based in Reston, Va., recorded revenue of $2.3 billion over the 12 months that ended Sept. 26 and has 23,000 employees worldwide. DynCorp's clients include more than 40 federal agencies, including the departments of defense, state, agriculture, energy and justice.

Computer Sciences said the registration statement relating to the proposed acquisition has been declared effective by the Securities and Exchange Commission, clearing the way for a DynCorp shareholder vote to approve the merger. The vote is scheduled to take place March 7.

Analysts polled by First Call expect Computer Sciences to take in revenue of $12.4 billion for 2004.

In morning trading, shares of Computer Sciences were down 38 cents at $31.60.

Computer Sciences has nearly 64,000 employees and posted revenue of $11.3 billion for the 12 months ended Dec. 27, 2002.