Profit Slumps at SAIC

The company misses earnings estimates.
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Government contractor

SAIC

(SAI)

missed first-quarter earnings estimates as profit tumbled and sales posted only modest gains.

Net income fell more than 24% to $80 million, or 19 cents a share, from $106 million, or 31 cents a share a year earlier. Discontinued operations from SAIC's ANX and Telcordia subsidiaries accounted for a penny per share of profit.

Analysts had expected earnings of 20 cents a share, excluding discontinuing operations, according to Thomson Financial.

The company sold both subsidiaries last year.

SAIC attributed a 1% fall in operating income to "the timing of business development and internal research and development spending." The company expects this trend to last throughout the fiscal year.

Acquisitions helped lift revenue by 6% to $2.1 billion, roughly in line with analysts' consensus forecast. The company said that internal growth unrelated to acquisitions contributed 2 percentage points to the quarter's revenue gains.

During the quarter, SAIC won a $394 million contract for computer systems support with the Air Force, and a $62 million contract with the Army for engineering support and handling of chemical materials.

"Thanks to the hard work of our 44,000 employees, the company is off to a good start for the year," said Chief Executive and chairman Ken Dahlberg. "In addition, the enactment of the (military) supplemental spending bill in May should allow our primary customers to fund their critical missions."

For the full year, SAIC forecast revenue between $8.7 billion and $9 billion and earnings of 83 cents to 88 cents a share, both in line with analysts' views.

Shares were trading down 34 cents, or 1.7%, to $19.25 following the earnings announcement after the markets closed.