CSC Earnings Rise 36% Despite Dip in Revenue

Thanks to business derived from homeland security projects and the continued growth of technology in outsourcing, Computer Sciences Corp. said Tuesday that its fiscal second-quarter profit rose 36% despite a dip in revenue.

The El Segundo firm -- the No. 3 computer-services firm in the U.S. -- reported net income for the three months ended Sept. 27 of $92.9 million, or 54 cents a share, compared with $68.2 million, or 40 cents, a year ago. Its revenue fell to $2.7 billion from $2.8 billion a year ago.

The revenue decrease reflects cutbacks at companies that are putting off projects and reducing costs while awaiting brighter economic times.

But CSC executives stressed that demand from the U.S. government -- one of the company’s most important customers -- remained strong.

“We continue to see the federal government as a key component of our future performance,” Chief Financial Officer Leon Level said during a conference call with analysts.

CSC benefited from increased government spending on security and intelligence, along with infrastructure modernization and an increased reliance on outsourcing, Chief Executive Van Honeycutt said.

“The U.S. federal IT [information technology] services market is growing well and industry sources are expecting the total IT budget for the government’s fiscal 2003 to increase by about 10% over last year,” Honeycutt said in a statement.

Overseas, CSC saw a softening of demand for its computer and financial services in Europe and Asia.

The company, which laid off about 900 workers last year, does not plan further cutbacks in personnel in the foreseeable future, Honeycutt said.

CSC’s shares fell 86 cents to $33.35 on the New York Stock Exchange before the results were released. They fell as low as $31 before recovering slightly in after-hours trading.