German data warehouse SAP following ORCL in overseas mkts.
CSC early AM warning:
Friday March 16, 6:00 am Eastern Time
Press Release
SOURCE: Computer Sciences Corporation
CSC Comments on Current Quarter Outlook
EL SEGUNDO, Calif., March 16 /PRNewswire/ -- Computer Sciences Corporation (NYSE: CSC - news) today announced that as a result of the decline in global commercial customer demand for traditional information technology (IT) consulting and systems integration services, reduced demand within the healthcare vertical market for software licensing and services, and recent adverse margin performance in some of its commercial businesses, it currently estimates earnings per share (diluted) for the fourth quarter, ending March 30, 2001, before special items, to be in the range of 35 to 37 cents. Revenue growth for the quarter is anticipated to be approximately 11% to 13% over last year's comparable quarter.
The company noted that the economic environment worldwide, as well as the demand for consulting and systems integration services, has deteriorated and the mix of services has changed during the quarter. Many of the company's customers are currently facing very challenging economic conditions. While CSC previously noted that economic uncertainties and capital spending constraints were adversely impacting its outlook, the sharp decline in demand for consulting and systems integration services has become more widespread as it extends from the U.S. to Europe. This environment, combined with selected commercial margin erosion, has prompted the company to revise its earnings guidance for the fourth quarter.
CSC anticipates that its fourth quarter performance will be adversely affected by the following:
-- Rapidly changing mix of services and deteriorating overall demand for
consulting and systems integration services, including ERP and Net
Markets in Europe, which are causing unanticipated reduction in global
staff utilization and billing rate realization, reversing previous
favorable trends;
-- An accelerating decline both in healthcare software license sales,
which have historically made a significant contribution to margins, and
in related services;
-- Profitability pressure experienced on two of its more recent
outsourcing engagements;
-- Reduced demand for out-of-scope consulting and systems integration
projects for certain commercial outsourcing clients, and recently
revised cost estimates on a few fixed price projects;
-- Lengthening sales cycles across many of its commercial businesses; and
-- Increasingly adverse factors in the Internet and healthcare markets,
which are causing the write off of some of the company's receivables
and an increase in the allowance for doubtful accounts.
CSC is developing an aggressive restructuring plan to respond to the worldwide economic environment and the issues described above. As a result of this restructuring, the company will take a special charge in the fourth quarter, currently estimated to be in the range of $100 million to $150 million. Included in the charge will be costs associated with staff reductions of approximately 700 to 900. This is in addition to any further charge associated with restructuring the global financial services operation as a consequence of the acquisition of Mynd Corporation, previously disclosed in CSC's Form 10-Q for the quarter ended December 29, 2000. |
