What happened

Shares of DXC Technology (NYSE:DXC) fell 40.4% in August 2019, according to data from S&P Global Market Intelligence. The provider of IT services, born two years ago when Hewlett Packard Enterprises (NYSE:HPE) spun out its enterprise services division to merge with Computer Sciences Corp., reported decent first-quarter results paired with disappointing guidance. The stock plunged more than 30% lower in a single day on that report.

So what

DXC's revenues fell 7.4% year over year to $4.89 billion. Adjusted earnings dropped from $1.93 to $1.74 per share over the same period. The analyst consensus had called for earnings near $1.70 per share on top-line sales in the neighborhood of $4.86 billion, and DXC exceeded both of those targets.

However, management also slashed full-year earnings guidance from $8.13 to $7.38 per share -- a 9% haircut. The full-year revenue forecast also got a 2% shave, landing at $20.45 billion. The analyst view at the time had been calling for full-year earnings near $8.20 per share on approximately $20.8 billion in top-line sales.

A large, red charting arrow trending downward.

Image source: Getty Images.

Now what

The company is still struggling to integrate the halves of its two-part heritage. Management is focusing on cost-cutting efforts, and even those efforts have been delayed by a time-consuming process of converting traditional software license customers into cloud-based service subscribers.

"Our cloud infrastructure [is] growing faster than what we had expected," CEO Mike Lawrie said in the earnings call. "That's requiring us to take more actions from a cost standpoint and we didn't execute that as quickly as we wanted to in the first quarter and we think we can catch up on that as we go through the second, third and fourth quarters of this year."

DXC's shares have now fallen 62% over the last 52 weeks and are trading at just 4 times forward earnings today. This could be a fantastic value play if the company ever gets its act together -- or a brutal value trap if it doesn't. Personally, I'm quite content to watch this drama from the sidelines.