A Fog-less CSC

Computer Sciences Corporation has long stood shoulder-to-shoulder with the top Beltway bandits. In fact, the company has been recognized as a player in government IT, outsourcing and managed services for the 20 years I have been active in the Washington, DC technology community.

The past 36 months has seen quite a shift for CSC – the company’s hip, new corporate brand. In late 2005, CSC was being actively shopped as an acquisition target with a myriad of private equity firms and government contractors in the hunt.

The market tanked. A deal never got done. So, CSC’s board turned to plan B: bring in a new leadership team and invest in the growth of the business.

From the content of VP and Chief Development Officer Randy Phillips’ presentation to the Association for Corporate Growth (ACG) National Capital Chapter it appears things are humming along at CSC. The company relocated its headquarters to Falls Church, Virginia. It has put its cash to work as a buyer. And it invested up and down the organization in marketing and sales.

As a result, CSC now stands as the world’s largest independent IT company with a diverse customer portfolio across government and commercial enterprise markets. Moreover, the stock has remained steady even as the major exchanges cratered.

Here is a recap from Randy’s presentation entitled “The Fog has Lifted:”

--CSC has 92,000 employees working in 90 countries. The company just celebrated its 50th anniversary.

--Business is split: 35 percent public sector (about $6.7B), 26 percent business solutions and services (fastest growing segment), and 38 percent managed services.

--Created CSC Ventures as an internal capital funding organization to spur innovation among its employees.

--Company has a “Damn Fine Acquisition” methodology. “D” stands for desirability, “F” is for feasibility, and “A” is for availability. Challenge in the current M&A environment is the still unrealistic expectation of entrepreneurs regarding valuation. Many still believe that a 10 to 15X EBITDA is defensible in the current economic environment.

--CSC’s strategic priorities moving forward include:

1. Expand public sector business
2. Scale business solutions
3. Focus outsourcing in growth segments of the market
4. Improve competitiveness in core geographies
5. Push offshore
6. Streamline organization for value delivery