By Jim Finkle
May 17 (Reuters) – Computer Sciences Corp’s new CEO
vowed to turn around his struggling firm as it posted an annual
loss of $4.2 billion, saying he is working hard to lay the
groundwork for a return to profitability.
“These results are very poor. They are unacceptable ,” Chief
Executive Mike L awrie said on the technology services firm’s
earnings conference call Thursday. “We are taking immediate
actions.”
Lawrie, a former IBM executive who took the helm at CSC in
March, said he would cut expenses by $1 billion over the next 12
to 18 months, look at selling “non-core” assets, and quickly
assemble a new management team to help engineer the turnaround
effort.
One focus area has been renegotiating a multibillion-dollar
contract to implement a system for managing digital medical
records for Britain’s National Health Service. CSC has been
losing money on the contract. Lawrie said he expected to sign an
interim agreement amending the terms of the pact in the
“not-too-distant future.”
The company has uncovered about 40 other troubled contracts
and is in the process of taking steps to remedy those problems,
he added.
CSC shares fell 2.2 percent to $25.83 in midday trading on
the New York Stock Exchange, about double the percentage decline
in the Nasdaq Composite Index.
The company posted a loss attributable to common
shareholders of $158 million, or $1.02 per share, for its fiscal
fourth quarter ended March 30, compared with a year-earlier
profit of $171 million, or $1.09 per share.
Revenue fell 2.1 percent to $4.1 billion.
Lawrie attributed the company’s problems to the NHS
contract, difficulty managing costs, and “headwinds” in its
business with the U.S. government and in Europe.
“Our company is in a turnaround situation and we are taking
the first steps,” said Lawrie, an IT industry veteran whose
career includes 27 years at IBM. “This will be a
multi-year journey.
CSC, which named a new CFO on Monday, said it would hold off
issuing full-year earnings projections until later this year.
The company promised to provide an in-depth update on the
status of its turnaround at an investor meeting scheduled for
Sept. 10.
