NHS IT blunder biz CSC wilts as profit bleeds, costs staunched
Still needs to pay back millions to Blighty
Computer Sciences Corporation (CSC), which bungled building a central patient database for the NHS, suffered a 78 per cent drop in profits year-on-year in its last quarter.
CSC reported a net income of $42m for Q1 of fiscal year 2013 [PDF], down from $185m banked in the same period last year. Revenue stayed roughly the same as last year: it took $3.96bn compared to $4.03bn a year ago, but costs spiralled this quarter and pushed profit down.
A $27m bill was attributed to "restructuring", which included payouts to employees axed in the swingeing job cuts programme at the company, but there were other increased costs too.
The company hasn't fully paid the $1.5bn penalty owed to the NHS for cocking up its patient records contract, a payment that is due over the next 18 months.
Reporting a difficult quarter for the company, CSC CEO Mike Lawrie drew on the positives:
Our first quarter performance reflects a first step in turning around CSC. While there is significant work ahead of us, I am pleased with our initial progress on operating margins and free cash flow
In an earnings call to investors Lawrie added that heavy tax bills running at 43 per cent were weighing down profits. He said it was a result of their foreign investments and the costs will be reduced next quarter.
Public sector contracts in the US were also down compared to last year, and the Business Solutions and Services wing lost money: big restructuring costs pulled the department into the red.
Lawrie told investors that the outlook for the fiscal year ahead was flat or slightly lower revenue, but he insisted CSC was turning the corner. The results are an improvement on the financial reports published in March as the company felt the aftershocks of the NHS fiasco.
CSC has approximately 96,000 employees and reported revenues of $15.8bn for the 12 months ended June 29, 2012. ®