Computer Science Corporation (CSC) recently entered into a $2.9 billion information technology infrastructure management service agreement with Zurich Financial Services Group for a period of 10.5 years. Under the terms of the contract, Computer Sciences will centralize Zurich Financial’s data center and will virtualize its server arrangement.
The company expects to start the services under this contract in the first half of next year. As per the terms of the agreement, around 1000 employees from the Zurich Financial services division will be transferred to Computer Sciences during the first half of 2010. Computer Sciences has a long term relation with Zurich financial which dates back to 2004 and this new service agreement is the extension of the same relationship.
So we believe this is a major deal win by the company, which will positively impact the company’s revenue base in the coming years. The company has posted encouraging second quarter 2010 results, with revenue of $4.0 billion increasing 4.7% from $4.2 billion in the year-ago quarter. The company’s second quarter 2010 EPS of $1.40 also exceeded the Zacks Consensus estimate.
The company is consistently winning new business deals. In the recently concluded second quarter of 2010, the company won $4.58 billion worth of new business awards. Of the three lines of business, North American Public Sector (NPS) accounted for $3.23 billion, Business Solutions and Services (BSS) $0.98 billion and Managed Services Sector (MSS) $0.37 billion of the new business.
In the current quarter, the company secured new business awards of approximately $4.2 billion, including the Zurich Financial Services Group contract. With gradual revival in the U.S. economy and increase in IT spending, the company is expected to post good numbers in the coming quarter.
Read the full analyst report on “CSC”
Zacks Investment Research
