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Technology Stocks : CSC Computer Sciences Corp -- Ignore unavailable to you. Want to Upgrade?

To: Lee Lichterman III who wrote (117)	10/3/1999 12:25:00 PM
From: E_K_S	Respond to of 125

Hi L3_aka_L3 - Here is a post I made on the Raging Bull thread re: CSC's purchase of Nichols. CSC's stock may be under pressure (short term) and should trade in a range until the deal closes. The purchase price paid by CSC for Nichols is based on the average price of CSC stock over the next 60 or 90 days. (The exchange ratio is subject to adjustment based upon the average closing price of Computer Sciences stock during a specified period before the deal closes, the company said.) As a result I have sold deep in the money calls through November and expect CSC to stay in a trading range between $62-$72 until the Nichols deal closes. After that, CSC's revenues and earnings should grow perhaps at a 30% rate from last year. Note the huge backlog of contract revenues CSC gets from the Nichols purchase. It guarantees new revenues as far out as three years! I have made excellent returns from CSC by selling covered calls BUT I expect CSC to move to all time highs next year after the Y2K thing is behind us. A PE of 30 is a fair price as both earnings and revenues vision is pretty good for 2001-2003. Also the Nichols purchase at 1x's sales is an excellent buy IMO. EKS Post from Raging Bull thread: (http://www.ragingbull.com/mboard/boards.cgi?board=CSC&read=28) "...From what I can tell, it looks like they paid just under 1x contract sales in CSC stock. In the 12 months ended May 31, Nichols recorded $455 million in revenue. CSC has agreeded to pay $391 million, however The $391 million price tag does not include options held by Nichols' employees. Nichols has a total U.S. federal contract backlog of over $1.2 billion. Here are some more comments from an earlier PR newswire: "...In the healthcare market, which accounts for approximately 10 percent of Nichols' revenues, the combination of the companies' expertise will enhance CSC's strong position in the claims processing and applications outsourcing areas. Nichols uses a software platform for claims processing delivered through an Internet-based network while CSC has been offering solutions based on its Power MHS mid-range platform. ''The addition of Nichols' healthcare capabilities supports several of our growth strategies,'' Honeycutt explained. ''First, it strengthens our offerings and positions CSC as one of the leading I/T service providers in the managed care market segment. Second, with these enhanced capabilities, we continue to capitalize on the growing trend for companies to outsource their business processes and applications software needs.'' Nichols supports a wide array of health insurance and provider organizations in the managed care and practice management segments of the healthcare market. Finally, in the commercial consulting and systems integration sector, approximately 220 Nichols professionals will join CSC and expand the company's expertise in developing and implementing enterprise-wide solutions for corporate and state government clients. These professionals are currently fully billable on existing long-term projects for a variety of commercial and state and local government clients. Nichols' commercial consulting activities represent approximately 10 percent of the company's revenues...." ===================================================== Look's like a pretty good "value" buy by CSC...." EKS P.S. It also appears that CSC and Hughes Electronics Corp., a General Motors Corp unit, extended their IT service contract covering Hughes' information technology infrastructure in a two-year deal worth $60 million. (http://biz.yahoo.com/rf/990930/2p.html) This further provides earnings vision out through 2002.