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14 May 15. Computer Sciences prepares to break itself up – sources. Technology consulting services provider Computer Sciences Corp (CSC.N) is planning to separate its government business from its commercial information technology division, people familiar with the matter said on Thursday. An announcement could come as early as next week, when CSC releases its fiscal 2015 earnings on May 19, the people said. The breakup would follow multiple attempts by CSC over several years to sell itself. The company has a market capitalization of close to $9.5bn. The company is in the midst of a cost-cutting campaign amid sequestration and budget pressures from the U.S. government. However, its government business is seen as attractive to potential buyers because of the high barriers to entry for competitors. While CSC is still open to acquisitions, it now sees a split in which shareholders would also get stock in a new company as the most attractive and tax-efficient transaction to pursue, one of the people said. The sources asked not to be identified because the deliberations are confidential. CSC declined to comment. The company’s shares ended trading 4.3 percent higher at $67.28 in New York on Thursday, after jumping as much as 7.1 percent earlier on the news. In recent months, CSC has drawn buyout interest from French consulting company Cap Gemini SA (CAPP.PA), computer maker Hewlett-Packard Co (HPQ.N) and Canadian consulting firm CGI Group Inc (GIBa.TO), as well as private equity firms. None of them could meet CSC’s valuation expectations, one of the people said. Representatives for Cap Gemini and CGI did not immediately respond to requests for comment. An HP representative declined to comment. Hedge fund Jana Partners LLC disclosed a 5.9 percent stake in CSC in February, and said it would continue talks with the company about strategic alternatives and the composition of its board. CSC’s North American public sector division offers IT and operations-related services to the U.S. Department of Defense and civil agencies of the federal government, as well as foreign, state and local government agencies. It had revenues of $998m in the nine-months that ended on Jan. 2, 2015. The non-government divisions of CSC provide a wide range global infrastructure and business services, including cloud, cyber security and big data services. They had combined revenue of $1.9bn for the nine-months that ended on Jan. 2. (Source: Reuters)
13 May 15. Cisco profit edges past estimates despite weak telecom spending. Cisco Systems Inc.’s (CSCO.O) quarterly profit edged past market estimates as demand for new switches, routers, wireless gear and servers made up for sluggish spending by telecom customers and weak sales in emerging markets. The network equipment maker is making a transition towards high-end switches and routers and investing in new products such as data analytics software and cloud-management tools. Last month, market research firm Gartner (IT.N) forecast a decline in telecom services spending this year.
“We are a cash and profit machine,” outgoing Chief Executive John Chambers said in his last post-earnings conference call on Wednesday.
He also shot down rumors that Cisco bid $9bn for FireEye Inc (FEYE.O), sending the cybersecurity company’s shares down 3.4 percent in extended trading. Company veteran Chuck Robbins will take over as CEO when Chambers steps down in July after 20 years at the helm.
“I will be his wingman,” Chambers said.
Several analysts have interpreted the transition as a signal of changing priorities of the company, which is struggling to boost bottom line in the era of cloud computing. Cisco said it expects an adjusted profit of 55-57 cents per share for th