Updated from 5:22 p.m. EDT
, in addition to swinging to a loss on the bottom line, posted earnings that were in line with analysts' estimates and revenue that was a bit higher than expected.
The IT-services company on Tuesday reported that it lost $55.3 million, or 29 cents a share, for its first-quarter 2007, tumbling from a $131.6 million profit, or 70 cents a share, in the same quarter last year.
This year's quarterly results include $215 million in restructuring charges and a gain of $18.3 million related to the sale of
Excluding certain items, CSC earned $116.5 million, or 61 cents a share, an increase from $108.7 million, or 58 cents a share in the year-ago quarter. On that basis, the company matched the Thomson First Call estimate of 61 cents a share for the quarter.
The El Segundo, Calif.-based company's revenue dipped to $3.56 billion from $3.58 billion, but still a shade above the average analyst estimate of $3.55 billion.
"Our solid first quarter results begin another year of anticipated improved operational performance," CEO Van Honeycutt said in a statement. "The quality and quantity of our federal and commercial pipelines are expected to provide us ample opportunities to enhance our operational progress going forward."
On a conference call with financial analysts late Tuesday, the company said it saw 5.8% revenue growth in its U.S. federal government segment. Its operations in Asia and Australia also did well for the quarter, while revenue in Europe and its U.S. commercial market declined.
"We're off to an extremely good start in the federal space," Chief Operating Officer Mike Laphen said. For its commercial segment, he acknowledged "it's been a bit soft. We expect that to pick up."
"It's fair to say we need to capture some new
commercial business in the second half," executives said.
When asked about its business strategy after deciding not to pursue a sale of the company, Honeycutt said CSC considered its alternatives and the best option was to continue on the path of selling IT services to government and companies around the world: "It's just that simple."
"We think the U.S. federal IT service business is a great business to be in," he said. "We've got a great market and we'll continue to pursue that."
Meanwhile, Honeycutt said the company is very active and interested in growing through acquisitions. CSC is also increasing its presence in India and other offshore locations. It has plans to open a facility in the Czech Republic to serve its European customers.
The company also completed $1 billion of its planned share buybacks, and expects to do another $1 billion in share repurchases in six months to a year.
For the current, or second, quarter, CSC expects its EPS to be in the high 60-cent to low 70-cent range on sales of $3.5 billion to $3.6 billion. Analysts forecast even higher, however, anticipating an EPS of 79 cents a share on sales of $3.66 billion.
The news was better for the full year. The company raised the range of its full-year EPS guidance for fiscal year 2007 by a dime. The company now expects an EPS between $3.71 and $3.81. The analyst average for the full year is $3.66 a share.
Sales are expected to range from $14.91 billion to $15.06 billion, the company said. Analysts expect revenue of $15.02 billion.
In after-hours trading, shares were off 2 cents to $51.48.