El Segundo, Calif.-based IT services company Computer Sciences Corp. Tuesday scored a $1.1 billion extension of its outsourcing contract with United Technologies Corp.
CSC said the agreement extends its contract with UTC until December 2014, bringing the total value to $3.7 billion over 15 years. The original 10-year agreement was announced in October 1999.
Analysts at Goldman, Sachs said that the win highlights the appeal of outsourcing as a cost cutting tool. No changes were made in earnings estimates, for either company, however.
With four and a half months left in the company’s fiscal 2002, CSC has announced approximately $10 billion in U.S. commercial, federal and international contract awards, compared with last fiscal year’s total of approximately $11 billion.
Given the current momentum, “it’s likely that CSC will surpass last year’s total for the
current fiscal year,” GS said in an advisory to clients. “The near-term benefit to revenue from this year’s wins, however, will be muted to some degree by a higher mix of contract
extensions versus new customer wins.”
CSC stock was down 10 cents at $45.20 in mid-morning trading.
Earlier this month it signed a $700 million agreement with Bermuda-based IP bandwidth provider Global Crossing Ltd.
Hartford, CT-based UTC makes everything from elevators to jet engines to helicopters under such names as Carrier, Otis, Sikorsky and Pratt & Whitney.
John Doucette, vice president of e-business and chief information officer for UTC, said the deal will save his company “in excess of $1 billion on IT services over the life of the agreement.”
Separately, CSC warned that despite the events of Sept. 11 and the ongoing war against terrorism, corporate information systems “remain dangerously vulnerable to cyber attacks,” according to the findings of a survey.
Survey results revealed that among the organizations polled, 46 percent do not have a formal information security policy in place; 59 percent do not have a formal compliance program supporting their information systems (IS) function; and 68 percent currently do not regularly conduct security risk analyses or security status tracking.
The annual CSC Critical Issues Survey revealed that IS managers generally held a lackadaisical view toward protecting and securing information systems prior to the attacks against the World Trade Center.
“While most IS professionals recognize the benefits of protecting and securing data, the business leadership in the organization still sees security as a ‘nice to have’ rather than a ‘need to have,'” said Ron Knode, CSC’s global director, managed security services.
CSC Scores $1.1B Contract Extension
