Falls Church, Virginia: CSC has written-off almost $1.5bn as a result of its disputed contract with the UK's National Health Service IT programme.
The company, which was contracted to supply electronic patient records systems to a number of NHS trusts, had warned shareholders of the write-off last December, and it confirmed the hit in its third quarter results published last week. The figures also show a $204 million revenue reduction for on-going NHS work.
Following the NHS reduction, revenues for the quarter to 30 December 2011, were $3.76 billion, down from $3.99 billion in the same quarter in 2010. After nine months revenues were $11.76 billion, down from $11.84 billion a year ago.
After the write-off CSC posted a third quarter pre-tax loss of $1.43 billion, compared to a profit of $230 million in 2010.
Chief executive Mike Laphen told a conference call that negotiations with the UK government and NHS officials continue to determine the scope of CSC's future NHS work. "Notwithstanding the NHS charge, discussions continue toward defining a program scope and a market potential that builds upon our accomplishments to date", he said.
CSC also confirmed last week that Laphen is to be replaced as CEO by Mike Lawrie, who is moving from software firm Misys.
New Business Awards
Across CSC's three lines of business, new business awards for the third quarter were $4.1 billion. North American Public Sector (NPS) contributed $0.8 billion, Managed Services Sector (MSS) delivered $2.4 billion, and Business Solutions & Services (BSS) closed $0.9 billion of new business.
On a year-to-date basis, new business awards were approximately $13.0 billion which is a 26% increase compared to the previous year.
Revenue by Line of Business
For the quarter, revenue from BSS was $0.74 billion. After adjusting for the $204 million NHS reduction, BSS revenue was $0.94 billion (an increase of 5.0% from the third quarter last year and an increase of 4.9% in constant currency). NPS revenue was $1.38 billion (down 6.1% from the third quarter last year). MSS revenue was $1.67 billion (an increase of 1.0% from the third quarter of last year and an increase of 1.1% in constant currency).