Ziff Davis Internet
News & Resources for the IT Reseller
NewsReviewsTech AnalysisCommentarySecurityLinux/Unix
My Account |  

Computer Sciences to Restructure
By  Matt Hines


Computer Sciences Corp. announced that it will undergo major internal restructuring over the next year, even as the company's directors consider potential buyout offers from Wall Street.

ADVERTISEMENT

CSC Chairman Van Honeycutt detailed the plans in a statement, saying that the restructuring program will be aimed squarely at streamlining the IT services giant's worldwide operations, and specifically predicting significant jobs cuts in regions where he said the firm is overstaffed.

The executive said the cost-cutting plan will involve the layoff of approximately 4,300 employees during the company's fiscal 2007, which began April 1, and about 700 employees in 2008. CSC said that the majority of the layoffs will occur in Europe, but indicated that its plans will vary by country based on local legal requirements and internal reviews.

eWEEK special report: The State of IT Employment

Excluding pre-tax restructuring charges of approximately $345 million that CSC plans to report in fiscal 2007, and approximately $30 million in similar charges planned for fiscal 2008, the company said it expects the restructuring plan to result in pre-tax savings of approximately $150 million in fiscal 2007 and about $300 million in fiscal 2008.

CSC is reported to have close to 79,000 employees and had sales of over $14 billion in 2005.

"For some time it has been apparent to us, and to other companies in our industry, that there is excess capacity in certain geographies, particularly Europe," Honeycutt said. "After lengthy consideration, we have decided that this is an appropriate time to deal with the issue through a restructuring; this action is designed to enhance shareholder value regardless of any strategic alternatives we may explore."

The strategic alternatives referenced by Honeycutt include a potential sale of the firm. CSC's board of directors said they have decided to explore new possibilities to buoy the company's stock value, including a sale of the company. The company said it has retained Goldman, Sachs & Co. as its financial adviser in the acquisition process.

However, the company's board warned that there is no guarantee that a sale will be made and said it does not intend to share any developments in the process of finding a buyer unless it has already approved a specific transaction.

Last October, CSC was reportedly going to be bought by private equity firm Blackstone Group and Lockheed Martin Corp. It never happened. Then in January, Hewlett-Packard and Blackstone were in the running. That deal never happened either. Both stories were initially reported in the Wall Street Journal and followed by every other news outlet.

PointerClick here to read more about HP's interest in CSC.

Now the rumor mill is picking up steam again. UBS analyst Adam B. Frisch opined in a research note March 15 that CSC's story is getting more interesting. Calls from investors have increased recently about CSC being acquired and merger talks may resume at some point, wrote Frisch.

PointerCheck out eWEEK.com's IT Management Center for the latest news, reviews and analysis on IT management from CIOInsight.com.

     
Email


TALKBACK

MICROSOFT RESOURCE CENTER
Help boost your sales with BONUS PACKS.
Let BONUS PACKS help you sell more PCs—with up to $1,200 in valuable products and services. Visit
Buy Local Partner site >>

Join the Microsoft Empower program for ISVs.
A relationship with Microsoft allows you to compete with the big dogs. Learn more about resources, tools and training. Get the documentation >>

Piracy hurts your bottom line.
But it's going to hurt pirates even more—eight new piracy lawsuits were filed in March. See who's on the list. >>
Free Hands-On Training Lab
Find out how key features of SBS 2003 can help you open up a new line of revenue. Register now >>


SBS 2003 Sales Reference Card
This handy reference card contains features at a glance, sales objection handling, pricing guidelines & more. Get it now >>


Microsoft Empower for ISVs rewards your big idea with big benefits and support.
Access key development tools at a low cost to help you develop that idea into an innovative application. Learn more >>



ATTN: SOLUTION PROVIDERS
Autotask makes your IT business run. Better!
  • Manage your entire business from a single integrated system accessed over the web
  • Track and control service tickets, and efficiently dispatch field service techs
  • Monitor and analyze project profitability by project, customer and type
  • Bill by fixed price, time & materials, block hours or retainers
  • Set up workflow rules and automated notifications
  • Nothing to install. Easy to use. Affordable.
Click here ONLY if you want a personalized demo via the web
(North America only, please)


Attention Microsoft Solution Providers!



Want to gain a competitive edge? Try Microsoft Watch – FREE!



Each week you receive:
  • Microsoft News and Insider Information
  • Expert Analysis
  • Code Names of Upcoming MS Products
  • Year-Ahead Calendar, updated monthly



    Click Here to sign up now for your FREE 14 Day Trial to Microsoft Watch.

  • POPULAR TOPICS
    SPECIAL REPORTS
    White Boxes
    MS vs. IBM
    Linux in the Channel
    Network
    CHANNEL RSS FEED
    Stay in the Zone
    Put The Channel Insider on your desktop.
    FREE NEWSLETTERS
    Subscribe to The Channel Insider: Channel News, Reviews, Resources and more.

    Make your selections below:


    Contract Watch

    The Channel Insider Update

    Preferred e-mail format:

    Enter your e-mail:


    view all newsletters >>
    Channel Insider Quick Links
    Ziff Davis Footer Logo