Wednesday, 18 March 2015

More Bad Luck - OR - Bad Decisions

They say you can make your own luck. In fact Napoleon Bonaparte when asked to promote an officer always asked 'Is he lucky?' or more correctly 'Il a de la chance?' 


Judging by recent court cases and headlines there are some very unlucky people in CSC.
Follow the links to three current stories and make up your own mind.

Story One:

CSC's ServiceMesh named as source of bank exec bribe

Was winning deal at top Oz bank seen as value-fluffer before acquisition?

http://www.theregister.co.uk/2015/03/18/cscs_servicemesh_named_as_source_of_bank_exec_bribe/

US firm ServiceMesh founded by former Al Gore adviser at 



CBA's kickback scandal raises new questions about banking 


CBA IT Exec Charged With Bribery, ServiceMesh Allegedly Involved.

http://www.forbes.com/sites/benkepes/2015/03/17/cba-it-exec-charged with-bribery-servicemesh-allegedly-involved/


Story Two:
NEW ORLEANS (CN) - A defense contractor lured scores of 

computer technicians to work in war zones with false 

promises of competitive hourly pay, the aggrieved workers 

claim in court.

In a lawsuit filed in the New Orleans Federal Court, 66 

computer technicians say they were hired by Computer 

Sciences Corporation in 2006 and afterwards, after the 

company received numerous contracts to provide services in 

Kuwait and Afghanistan to support the war effort.
http://www.courthousenews.com/2015/03/17/workers-say-defense-contractor-stiffed-them.htm

Story Three:

CSC employee morale at "all-time low"

CRN USA reached out to CSC, requesting comment from the company or CEO Lawrie, but did not hear back after multiple requests by phone and email.
http://www.crn.com.au/News/401514,csc-employee-morale-at-all-time-low.aspx



Monday, 2 March 2015

Caveat Emptor

The contributors to this blog have some interesting, sage, and trenchant comments to offer as advice to any potential buyer of CSC. Here are some listed as they occurred over recent weeks. The formatting isn't pretty but the words tell their own story.

Interesting to see how Wall Street really don't actually look at companies at all.

Those stinking figures caused the share price to fall from $64 to $60 - seems a little low, but I suppose at least a reaction.

However, by the end of the week, the price is up to just under a record high for CSC.

I suspect some market commentator will say that with the SEC investigation behind CSC and the pensions fund problems sorted then everything is clearly on the up and a brighter future is around the corner.

If you took only 5 seconds to do the analysis then you might come to that conclusion, but the rest of the market briefing talks of no new products to sell, no customers to buy them, no staff to deliver them and "no clue" from the CEO.

Still Wall Street, I'm sure that's a mighty fine investment you've just made...

         Anonymous15 February 2015 at 21:52
Nothing learnt from the eighties....... anybody with any investment in a 401K, stocks or, heaven forbid, CSC should read Liar's Poker.
        
         http://www.amazon.com/Liars-Poker-Norton-Paperback-Michael/dp/039333869X
          
         Anonymous17 February 2015 at 14:26
You have to be clueless to buy CSC shares today at a price which is just pennies off its highest for 10 years. Forget the analysts' spread sheets of earnings growth and all that. CSC is achieving it by cutting muscle, losing some of its best talents and by financial engineering. Look at the revenue shrinkage and CSC's competitive market position in key technology areas to get the real picture. You people holding or buying CSC stock today will be crying soon.

         Anonymous18 February 2015 at 23:37
And the price has broken new ground today... highest its been in this century, despite the market falling today.
        
         I'd love some of the drugs Wall Street are smoking.

         Anonymous19 February 2015 at 11:27
Why no one is coming forward to buy this company? Main Street is wiser than Wall Street. Or now that company is doing *great*, Mike and team does not want to sell the company anymore. Higher the valuation, less probability of finding a buyer given the questionable fundamentals we all are aware of.

         Anonymous19 February 2015 at 11:34
What will be the price if the buyback for the last several quarters is factored out?

         Anonymous19 February 2015 at 13:41
As sad as it may seem to all of us in the trenches, Mikey is accomplishing what the board put him there to do - the key is to understand what that is. His one and only goal was to drive up the stock price. Not to build a good company. Not to have happy employees. Not to foster technical and product innovation and excellence.
        
         I repeat - MIKEY'S MISSION WAS TO DRIVE UP THE STOCK PRICE BY ANY MEANS NECESSARY.
        
         As noted, Wall Street loves it - simply because the only thing they do is put numbers into a spreadsheet, crank the handle, and see if what comes out meets some standard formulas. If you don't believe this, just spend some time looking at analyst ratings and recommendations for CSC and you won't find anything about products, employees, or anything that affects our lives and futures. It's all about the money.
        
         And you have to wonder who is buying all that stock after the price dipped by $5 per share and then bounced back to a new 52 week high in just a couple of days. Further share buybacks by CSC to prop up the price at an inflated level? A bit of insider trading on the knowledge that a sale is now imminent after the stock is hitting a predetermined target? Doesn't seem to make sense that a savvy investor would want a piece of it knowing that future sales and revenue are absolutely on the decline, but again, Wall Street is experienced in fabricating fairy tales.
  
        
         Anonymous19 February 2015 at 21:17
@13:41- Excellent perspective on the events at CSC since Lawrie's appointment. I think too that he has indeed accomplished what 'mahogany hall' asked of him and he executed the mandate. What happens going forward? It's likely that Lawrie will leave once he's ratcheted down all monies due him. The challenge then will be laid on the shoulders of the next CEO to initiate damage control, stem the hemorrhaging of skilled workers, secure revenue and rebuild the company. No easy task. A lot could happen at any point and parts of the company or contracts might be sold off. 

         Anonymous20 February 2015 at 14:48
Indeed, @21:17, the next phase of the fiasco is likely to sell off either the entire company or break it up to see if the parts are worth more than the sum. Selling was on the agenda in the last days of Honeycut as CEO, and that failed because nobody could see the value of the company without the stock price being higher (starting to make some connections now?). Nobody is really sure how Laphen had a chance at the helm, and that was a disorganized and fragmented attempt at letting the heir apparent have a go at it. Now we have Mikey at the help to just slash and burn at the direction of the Wall Street master and the board of directors to gut it out for maximum money. What else could it be? We see declining revenue, talent leaving as fast as possible, and a failed new product / direction strategy (as evidenced by all of Mikey's "Shining Stars" such and Sam Visner, Siki Gunther, et. al. leaving after short tenures and no impact). No new business pipeline, falling revenues, and all the blood squeezed from the turnip for cost reduction.
        
         Please, oh Great and Wonderful Mikey, show us what's next!


         Anonymous20 February 2015 at 17:05
In another demonstration of confidence in CSC's future, CSC President and CEO, Mike Lawrie had unloaded a further 3,049 shares at $64.56 per share in a transaction on February 13, 2015

                                       Anonymous20 February 2015 at 20:58
Just to "give that some color" (in the words of Mikey), between the 12th and 13th of February, he cashed in just shy of 1.5 MILLION DOLLARS of shares.... still of 10% of his ill gotten gains mind you.

                                      
         



         Anonymous22 February 2015 at 11:06
Shares spike to over $70 over the weekend after this tweet from @dealreporter:
        
         "$CSC Computer Sciences is in discussions to sell in a two part deal to strategic and PE, people familiar tell @Dealreporter #Exclusive"
        
         I always expected something to be closed off by April..... my bet is a deal with one of the Indian IT company's, probably HCL for the non-Federal business and NPS to somewhere else.
        
         Worth picking out as a new story Cassandra...
        
         Replies
                                       Anonymous23 February 2015 at 18:21
Mikey would certainly like to sell off at handsome profit for Wall Street, but there's probably a rub - sophisticated Indian IT companies (HCL, et. al.) are probably too savvy to pay such an inflated price for the pieces of CSC that they can get. Their only leverage in the market is cheap labor, and if it doesn't involve supplying cheap labor then they are no more competitive than anyone else. The way Mikey has technology wrapped up at the mercy of outside organisations (such as AT&T, etc.) means those deals are locked in and tied to alleged new products and revenue.
                                      
                                       Just remember, they tried this play in the past, and failed miserably. All there is so far is just rumor and wishful thinking.
                                      
                                       On the bright side, thank goodness Mikey can unload another batch of stock at an even higher price now.

                                      
         


        
                                       Anonymous23 February 2015 at 18:20
Some years ago, I was with a (then) very well-known US owned IT equipment manufacturer with a large presence in the Thames Valley. It was downsizing rapidly, and many people had the same "dilemma" as you have highlighted.
                                      
                                       It was a company which an excellent technical heritage and reputation. Those people who left of their own volition by and large got good jobs elsewhere . Those who stayed for the big final payout found themselves in a crowded labour market with many other ex-employees of the same company. Companies which were hiring in the area felt that those people who had hung on for the payout had done so because they lacked either the skills, the commitment or the drive to go elsewhere. So many of those who stayed collected a payout but damaged or killed their careers by doing so.
                                      
                                       You appear to have got yourself a much better job. Be happy about it, look forwards and don't waste your time looking in the rear-view mirror.
                                      
                             
         



         Anonymous23 February 2015 at 16:33
You have to understand, and before i begin, i am not pro CSC.
         Its actually in your benefit to have what is offshorable orshored. Frankly CSC has contracts from secure onshire accounts and those bit and pieces need to stay in country. Its there that you want to be. Still wont make you 100% safe, but its better than working for an account which is offshorable.
        
         Any business leader would offshore where he can, all the major IT firms do that. The smaller firms dont do it because you need complex contract negotiations with 3rd parties, and its sometimes too much of a hassle.
        
         The problem with Mikey is that he has no logic to the cuts he is doing, sack staff and then realises he hasnt got anybody left to do the role. Sacks staff and then is saying we cant recruit anymore.... all that stinks of short term miscalculation from Mikey. He thought he was king and that his strategy would work, but its backfired and now there is no plan B. 



         Anonymous23 February 2015 at 21:36
A thought about CSC being takeover by a foreign company.
         Much of CSC's work is in the US Federal and Defence sectors. Also CSC has or did have contractors, 'security people' on assignment for the government in Asia. Also CSC does work for what might be called USA Strategic Companies. That being the case is it likely that the authorities would approve a foreign owner.
         Also to consider is that much of the back office and shared infrastructure within CSC USA almost certainly relies on government contracts to keep them whole, once you strip way government work; and the commercial contracts may have to pay more for the infrastructure and shared services/overheads.
         Whoever may/might buy CSC had better do in depth due diligence.
         Pensioners - current and future had also better make sure their Union Reps and Pension Fund Reps or Trustees are keeping a close eye on the pension funds making sure they are performing well and are fully capitalised to meet long term commitments. Those pensioners that have transitioned into CSC through takeovers or outsourcing and could find themselves under 'new management' may not see the same commitment to them as they would have seen from their original employers.

                                       Anonymous23 February 2015 at 22:21
Nps, dib and non US government /defence clients go to the PE buyer, the rest of the true commercial clients go to the foreigners. Quite simple really, probably the commercial bit is one third of the revenue and two thirds of the employees... All of csc India for a start. Ironically its probably the latter who would take the brunt of the job losses if this was to happen with an existing Indian company as the buyer. 

                                      
         



         Anonymous24 February 2015 at 09:54
Surprisingly this company is always using the same speculative trick about a take over. Worst unethical company I have known.... It is a constant lie
                                       Anonymous24 February 2015 at 10:19
I'm not sure that's actually true. Sure they are liars in the main, but the idea that someone would buy any company is always a possibility (look around, M&A always has been going on) and certainly the idea of someone paying mega bucks to purchase what you own is only "maximising shareholder value".
                                      
                                       Traders (and the share price) play off of rumours and hard facts are always impossible to obtain because any and all negotiations or approaches are cloaked in secrecy.... and so you see these events occurring from time to time... for once its not actually "CSC disease".