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Computer Sciences Profit Rises 58% on New Contracts (Update3)

By Matthew R. Miller

Feb. 4 (Bloomberg) -- Computer Sciences Corp., the manager of networks for NASA and the U.S. Navy, posted a 58 percent rise in third-quarter profit after winning more contracts to manage software and data for businesses.

Net income increased to $179 million, or $1.05 a share, from $113.5 million, or 65 cents, a year earlier, the El Segundo, California-based company said today in a statement. Excluding some costs, profit was $1.11, beating the average estimate of 99 cents in a Bloomberg survey of analysts.

Chief Executive Officer Michael Laphen boosted government and commercial sales by acquiring companies such as Covansys Corp. He also has cut jobs and shifted more work overseas. In January, Computer Sciences announced it would move its headquarters to Falls Church, Virginia, to be closer to Washington.

``They had some pretty good results across the board,'' said Joseph Vafi, an analyst with Jefferies & Co. in San Francisco. He has a hold rating on the stock, which he doesn't own. ``The acquisition of Covansys has helped.''

Sales increased 14 percent to $4.16 billion in the period ended Dec. 28, beating the $4.05 billion estimate of analysts in the Bloomberg survey.

Computer Sciences rose $1.46, or 3.5 percent, to $43.55 in extended trading after the report. The shares, which dropped 7.3 percent last year, had fallen 5 cents to $42.09 in regular New York Stock Exchange composite trading.

Profit Forecast

The company projected fourth-quarter earnings of $1.33 to $1.43 a share, excluding some costs. That compared with an average analyst estimate of $1.48. Sales will be $4.2 billion to $4.5 billion, in line with the average estimate of $4.4 billion.

Computer Sciences said annual profit would be $3.75 to $3.85 a share, excluding some costs. That compared with a December forecast of $3.70 to $3.90. It had predicted as much as $4.20 in June. The company cited higher tax rates and other expenses when it lowered the forecast in December.

Last month, Computer Sciences completed its buyout of First Consulting Group Inc. for $365 million to expand into health- care markets. In April, the company paid $1.14 billion for Covansys to add 7,000 workers in India.

Growth in the U.S. commercial business was driven by the Covansys acquisition, Laphen said on a conference call.
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