Computer Sciences Corporation Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Computer Sciences Corporation (NYSE: CSC  ) dropped 14% in intraday trading today after announcing that the quarter that ended in March will come in below expectations.

So what: In February, the company forecast fiscal 2011 revenue of $16.2 billion and EPS of $5.20. Now it expects revenue of about $16.1 billion and EPS of about $4.75. The company's fiscal year ends in March, so the shortfall is crammed into its fiscal fourth quarter.

Now what: The fiscal-fourth-quarter EPS is likely to come in at about $1.12, well below the consensus estimate of $1.56. The relative sizes of the revenue and EPS shortfalls suggest expenses are out of control, which may indicate service delivery challenges. CSC also said it expects the size of a large contract with the U.K.'s National Health Service to be reduced and federal procurement delays affected new business awards; neither bodes well for the outlook.

Interested in more info on CSC? Add it to your watchlist by clicking here.

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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