Computer Sciences Corp. (CSC), a technology contractor for government and corporate customers, rose the most in six months after topping estimates with its quarterly results and annual forecast.
CSC gained 16 percent to $29.53 at the close in New York, the biggest increase since Feb. 8 -- the day after a new chief executive officer was appointed to turn the company around. The shares have advanced 25 percent this year as the company recovers from a U.K. health-contract dispute and regulatory probes into its accounting.
CEO Mike Lawrie, in his first few months in the role, is cutting about $1 billion in expenses over the next 18 months as he focuses more on profitability than revenue growth. He’s also trying to centralize the Falls Church, Virginia-based company’s operations around types of business, rather than geographies.
“We are beginning to see some early signs of improving financial performance,” Lawrie said on a conference call. “We have now begun the initial implementation phases of a much simpler and clearer operating model.”
The company predicted that earnings for the full year will be $2.10 to $2.30 a share. Analysts estimated $1.98 on average, according to data compiled by Bloomberg.
CSC also is moving toward a tentative agreement with the U.K’s National Health Service, after writing off almost $1.5 billion of a disputed contract, Lawrie said on the call. Once an accord is reached, it will need government approval, he said.
Meanwhile, CSC has completed an independent audit investigation into its accounting practices, he said. It found no additional material accounting errors. CSC said it will continue to cooperate with a separate Securities and Exchange Commission investigation into the matter.
First-quarter net income fell to $40 million, or 26 cents a share, from $183 million, or $1.17, a year earlier, CSC said today. Analysts had estimated 22 cents on average, according to data compiled by Bloomberg. Sales dropped 1.9 percent to $3.96 billion, in line with projections.
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