Computer Sciences Corp. said that it plans to separate its
government-focused business and its commercial-information
technology business into two publicly traded companies.
The information-technology services provider said it intends to
pay a special cash dividend of $10.50 a share at the completion of
the split-up, which is expected by October.
The Falls Church, Va.-based company also reported that its
earnings slumped during the quarter ended in April on a revenue
decline of 13% and one-time items such as pension-related losses
and restructuring-related costs.
Shares rose 4.9% to $70.99 in recent after-hours trading.
"During the first three years of CSC's turnaround, we benefited
from taking a unified approach," Chief Executive Mike Lawrie said
in a news release Tuesday. "The progress we've made, coupled with
the changing demands of the market, make this a good time" to
separate the businesses.
Computer Sciences has been under pressure from activist investor
Jana Partners LLC, which had been in talks with CSC's board and
management earlier this year about potential strategic alternatives
including a possible sale.
CSC said that the global commercial business will provide IT
services for major companies and non-U.S. government clients. The
business generated $8.1 billion in revenue for year ended in April
and will have more than 1,000 customers, 51,000 employees and 34
delivery centers globally.
The U.S. public-sector business will provide IT, infrastructure
and business services to U.S. federal, state and defense agencies.
The business generated revenue of $4.1 billion for the latest year
and has 14,000 employees.
For the period ended April 3, CSC reported a profit of $9
million, or six cents a share, down from $270 million, or $1.81 a
share, a year earlier. Excluding pension-related losses,
restructuring-related charges, tax benefits and other items,
per-share earnings from continuing operations rose to $1.26 from
$1.15. Revenue decreased 13% to $2.91 billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.20 and revenue of $2.96 billion.
Write to Tess Stynes at tess.stynes@wsj.com
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