Computer Sciences Corp (CSC) Thursday reported a decline in first-quarter profit, as uncertainty in federal budget hurt public sector revenue, while infrastructure services segment was impacted by price-downs and restructured contracts. Margins were also under pressure, even as overall results surpassed Wall Street estimates.
Moving forward, the IT service provider reaffirmed its earnings guidance for 2015, but below current analysts' estimates.
Following the results, CSC shares dropped more than 2 percent in after-hours trade on the New York Stock Exchange.
CSC, based in Falls Church, Virginia, posted first-quarter net earnings to stockholders of $146 million or $0.98 per share, compared with $174 million or $1.14 per share last year.
Excluding loss from discontinued operations, earnings for the quarter were $1.03 per share.
On average, 13 analysts polled by Thomson Reuters expected earnings of $0.94 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the first quarter edged down to $3.24 billion from $3.25 billion a year ago. Eleven analysts had a consensus revenue estimate of $3.19 billion for the quarter.
Revenue at Global Infrastructure Services segment edged down 1 percent to $1.13 billion. North American Public Sector revenue fell 3 percent to $1.02 million, due to uncertainty in the budget environment at the Dept of Defense and other federal agencies.
Meanwhile Global Business Services revenue climbed 3 percent to $1.09 billion. Growth in industry software and solutions offset declines in consulting business, the company said. Applications revenue also made modest gains.
Chief Executive Mike Lawrie said CSC continues to invest in commercial business, focusing on next generation offerings, strategic partnerships and sales capacity.
Results for the quarter were partly offset by operating margin that slid to 9.4 percent from 10.2 percent last year.
For full year 2015, CSC continues to expect earnings from continuing operations of $4.35 to $4.55 per share.
Analysts currently expect earnings of $4.49 per share for the year.
Separately, CSC said it is building on an existing alliance with IBM Corp (IBM) new ways to help customers accelerate their transition to cloud.
CSC closed Thursday at $61.33, down $0.77 or 1.24%, on a volume of 1.2 million shares on the NYSE. In after hours, the stock dropped $1.33 or 2.17%, trading at $60.00. In the past year, the stock has trended in the range of $46.80 - $65.52.
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