Because of issues with tax accounting, Computer Sciences Corp.
After the bell yesterday, the IT services company reported Q4 revenue that edged up 4% to $4.05 billion and net income that increased 57% to $249.7 million, or $1.42 per share. It was a strong performance.
There was a 4.8% increase in revenue for the North America public sector, and it looks like the growth will continue. A big driver is the Department of Defense's need to beef up its security.
The major weak spot came from the 3% fall-off in commercial contracts in North America. It's not clear if this is a short-run problem. But other players, like EMC
CSC's $1.3 billion acquisition of Covansys
The other nice benefit of the deal is the increased headcount of Indian employees, to 14,000. That should reduce overall costs, and it's a strategy that has worked for global operators like Accenture
CSC's full-year forecast is for revenue increases of 6% to 7% and earnings per share of $4.00 to $4.20. While this is fine, it's not enough to get investors excited. The IT slowdown is still a concern, and the company will need to integrate the Covansys transaction. So for Foolish investors, it looks like things may not rev up until next year.
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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,150 out of more than 30,000 in CAPS. The Fool has a disclosure policy.