Entergy Extends IT Contract - Analyst Blog

Entergy Corp. (ETR) has extended its contract with information technology (IT) services provider – Science Applications International Corp. (SAI) till 2015. The six-year contract carries a total value of more than $219 million. The work on the contract will be performed primarily in New Orleans, Louisiana, Little Rock, Arkansas, and Houston, Texas.
 
Under the contract, Science Applications International will continue providing comprehensive IT support services to Entergy including application development and maintenance, as well as infrastructure support – help desk, data center operations, and telecommunications services.
 
The contract was originally awarded in 1999. Providing comprehensive IT support services to Entergy till date, Science Applications has helped in recovery support during hurricanes Katrina and Rita, and other major storms. Entergy was able to develop two new data centers about storm damages and ensuring faster service delivery to customers.
 
McLean, Virginia-based Science Applications International has 45,000 employees. It has contracts with the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, and other U.S. government civil agencies. It also serves selected commercial markets.
 
New Orleans-based Entergy is primarily engaged in electric power production and retail distribution. With 30,000MW of generating capacity, it distributes electricity to 2.6 million customers in Arkansas, Louisiana, Mississippi and Texas. Of this, 14,631MW are gas/oil based, 2,259MW coal based, 70MW hydro based and the rest nuclear based. With around 13,000MW of nuclear-based energy, the company is the second largest nuclear power generator in the U.S. The company also distributes natural gas to 240,000 customers in Louisiana.
 
Entergy is focusing on its traditional electric utility business with a planned separation of its nuclear business. The company has shown a strong resilience during two back-to-back destructive hurricanes in 2008. Going forward, stable earnings from regulated utilities and significant free cash flow available for share repurchases, dividend hikes and/or debt retirement collectively support management’s focus on creating shareholder value. However, higher outages, an expected slide in power prices and pending regulatory approvals in New York and Vermont for the proposed spin-off of its nuclear business are areas of concern.
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