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Computer Sciences Corp. Plans Job Cuts

Posted on: Thursday, 6 April 2006, 18:00 CDT

By Anthony Cronin, The Day, New London, Conn.

Apr. 6--Computer Sciences Corp., a California-based information technology company that employs several hundred people in southeastern Connecticut, said Tuesday it expects to cut about 5,000 jobs over the next two years.

Also, the El Segundo, Calif.-based computer-services company said its board would explore "strategic alternatives" to boost shareholder value, including considering bids from potential suitors.

Computer Sciences has a large installation that employs about 479 in the Norwich Business Park and also has a smaller presence at the Electric Boat shipyard in Groton, where it provides various information technology services. Most of the layoffs, however, would come from its European operations, the company said.

The firm provides a variety of IT services, including systems design, business outsourcing, software development and Web hosting.

Mike Dickerson, a Computer Sciences spokesman, said the company has not broken down where actual job reductions will occur by specific geography. "We're not commenting beyond what we said in today's statement for now," he added.

The company issued a press release Tuesday morning that said it would trim about 4,300 jobs during fiscal year 2007 and an additional 700 employees in the following fiscal year. Its 2007 fiscal year began on April 1.

The company, which is a major vendor to the U.S. government, has a global work force of about 80,000 employees.

The news on Tuesday sent the company's shares higher on New York Stock Exchange, closing at $59.80 a share for the day, up 4.4 percent from the previous day's trading. Volume, representing shares bought and sold on Tuesday, rose to more than 5 million shares, significantly above its average daily volume.

The company's chief executive, Van B. Honeycutt, said the company has "excess capacity in certain geographies," notably its European operations.

"After lengthy consideration, we have decided that this is an appropriate time to deal with the issue through a restructuring," Honeycutt said.

The company said it wouldn't disclose any details relating to its potential sale "unless and until the board of directors has approved a specific transaction."

The Wall Street Journal has already reported that the California information technology company has brought out interested suitors and said a potential sale could fetch up to $10.6 billion or more.

The company also said it expected to take a pre-tax restructuring charge in fiscal 2007 of about $345 million and about $30 million in the following fiscal year.

Computer Sciences said that, excluding those charges, the restructuring could result in pre-tax savings of $150 million in fiscal 2007 and about $300 million in fiscal 2008.

The firm said it would retain New York investment banker Goldman, Sachs & Co. as its financial advisor.

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Copyright (c) 2006, The Day, New London, Conn.

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CSC, GS,

Source: The Day

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