(CSC) Computer Sciences Corporation Enters Government Deals

Tech behemoth Computer Sciences Corporation (CSC) has recently entered into a discussion with the National Health Service (NHS) department of the U.K., which may be expected to extend its relations with the government department. The interested parties have issued a non-binding letter of intent, which is expected to become binding by March 31, 2012.

The relationship between the two may be expected to improve as a result, although it will take some more time to come to an agreement.

Apart from NHS, the company is also enhancing its business prospects with NAVAIR UAS to enhance its business prospects with the U.S. Navy.

This job has been awarded to three main vendors under its indefinite delivery/indefinite quantity (IDIQ) agreement with them. The contract has been valued at $874 million, to be received over a 60 month period.

As per this agreement, CSC is eligible to receive task orders to fly land-based UAS aircraft to deliver streaming video from electro-optic and infrared cameras directly to military users in a remote theater of operations. The company is expected to deploy trained people, equipment and supplies to execute this job.

These facilities combined together results in cost savings for the customers, who are expected to receive Intelligence, Surveillance, and Reconnaissance (ISR) coverage without any additional investment in labor and equipment. The customer pays only for video hours delivered as a service.

CSC has never found much difficulty in attracting deals. Apart from Government orders, the company has also won some big-ticket private orders in the recent past. Overall, CSC’s pipeline of projects looks good right now and the company continues to augment it at regular intervals.

CSC has won a series of deals over the past six months. The company reported modest third quarter 2012 results, with EPS exceeding our expectation. Although revenues declined on a year over year basis, the flow of new business improved substantially from the year-ago period.

Despite the intense competition in the IT and cloud computing space from both small and big players such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ), the European exposure and strained federal budgets; we believe that things are beginning to look up given the new business wins.

Currently, CSC holds a Zacks #3 Rank (implying a short-term Hold rating).

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