Computer Sciences Acquires VRL - Analyst Blog

Virginia-based Computer Sciences Corp. (CSC) announced the acquisition of privately owned cyber threat intelligence firm, Vulnerability Research Labs (“VRL”). Financial details of the transaction were not disclosed.

Vulnerability Research Labs tracks critical vulnerabilities present in software and hardware products and various malware codes. The company’s sophisticated product range helps organizations to assess the level of vulnerabilities, detect threats and mitigate intellectual property theft. It provides security solutions to Fortune 500 firms, large multinational firms, financial institutions and individuals, to evaluate their exposure to respective threat areas. Following the integration, VRL will operate as a wholly owned subsidiary of Computer Sciences, under the latter’s global cyber security business.

The acquisition will enhance the existing cyber security portfolio offered by Computer Sciences to its global clients. The company will also benefit from VRL’s talent pool, which brings senior consultants, who may be employed to expand its security business. Moreover, Computer Sciences will have access to VRL’s rich customer base.

We believe the acquisition will prove profitable, as the jointly delivered new generation threat management solutions could significantly increase customer demand.

We remain encouraged by Computer Sciences’ acquisition strategy, which has helped the company to grow its portfolio and expand its customer base and geographical reach.

Last month, Computer Sciences acquired strategy and operations consulting firm, Bass & Company, which provides services to electric, gas and water utilities. The acquisition is expected to enhance the services offered by CSC to its global utility clients and support the company’s strategic presence in the chemical, energy and natural resources market.

Additionally, although the outsourcing industry looks disappointing, we believe that Computer Sciences is enjoying good business flow from the mainstream industry. Sluggish bookings and weak order renewal rates suggest relatively slower growth for the Outsourcing segment in 2011. Moreover, intense competition in the IT and cloud computing space from players such as Accenture Inc. (ACN) and Hewlett-Packard Co. (HPQ) are threats.

Considering the above situation, we currently have a short-term Hold recommendation on Computer Sciences, as indicated by the Zacks #3 Rank.