CSC Corp. on a Roll - Analyst Blog

Information Technology (IT) and Business Process Outsourcing (BPO) major, CSC Corp. (CSC) has been awarded two more task orders by the U.S. Navy worth a combined value of $56.0 million.

The two task orders, with individual values of $24.0 million and $32.0 million, respectively, were awarded under the SeaPort Enhanced indefinite-delivery/indefinite-quantity (“IDIQ") contract signed in April 2004. They have fixed tenures of five years each.

Both task orders are for support to Navy submarines, surface ships and unmanned vehicles, but while the first one is more focused on development and engineering for model-making (including software simulation, control systems and data analysis), the second covers the actual making of the models and testing them before manufacture.

A few days back the company was awarded a $135.0 million work order for providing support services to Program Executive Officer (PEO) Aircraft Carriers, and the recent win marks the continuation of the contract with the Navy.

CSC also disclosed that it has entered into an alliance with Honeywell Technology Solutions Inc. and formed a joint venture company called InSpace 21 LLC, which will be providing support to the integrated operations to the U.S. Air Force space community.

InSpace 21 will basically be conducting the bidding on the Air Force's upcoming Launch and Test Range System (LTRS) Integrated Support Contract (LISC). The JV is expected to provide integrated solutions to CSC's customers to help it move ahead with its operations.

The constant flow of new business will strengthen the revenue base of the company in the coming quarters. We believe that CSC's aggressive marketing, high quality of its solutions and greater customer satisfaction are doing wonders for the company.

The company has also taken aggressive measures to enhance its cloud computing business, with the recent introduction of CloudLab, a new development and test service mechanism, operational on the cloud computing platform.

CSC reported encouraging fourth-quarter results and provided a positive outlook for fiscal year 2010. Moreover, the company won $4.3 billion worth of new business awards during the fourth quarter.

The company has been supplementing strength in the core business with acquisitions that enhance its services portfolio and expand its operations in new markets. It has a steady flow of new business, especially in the government vertical and is financially sound. On the other hand, the tough competition that the company faces in the IT and cloud computing space from big players such as Accenture (ACN) and Hewlett-Packard (HPQ) makes us cautiously optimistic about the company.

Consequently, we reiterate our Neutral recommendation on the shares.

Read the full analyst report on "CSC"
Read the full analyst report on "ACN"
Read the full analyst report on "HPQ"
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