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It’s still only a few months since Mike Lawrie took over the reins at CSC after successfully rebuilding and selling off Misys to private equity (see here), so we weren’t expecting miracles (just yet). CSC’s Q1 results (to 29th June) are still muted of course, but there are signs of life. Headline revenues fell by 2% to $3.96b, though this was a 1% increase in constant currency terms. And while EBIT margins were still under pressure – down 30bps to 2.9% - at an adjusted level, the operating margin lifted a tad to 4.6%. CSC still views the world as a global village so as usual we don’t have any insight into EMEA performance. I am still hoping (against hope?) that Lawrie will introduce more transparent accounting so we can all get a better view of what’s happening in the geographical regions outside of US government.
On the NHS front (see CSC blames NHS for dismal results), Lawrie said they were making ‘good progress’ and hit a key milestone with the installation of iSoft’s Lorenzo care management software at three NHS Trusts, triggering a payment. Overall, the NHS contract is now running at break-even (that’s a result!) but not contributing any cash to the business.
Perhaps more so than with Misys, Lawrie has his work cut out to turn this business of several halves and a few other bits into a smooth running IT services machine. In fact, that’s probably not even possible within CSC’s current construct. So, just as Lawrie ditched Misys’ ill-fated and ill-fitting US healthcare business, surely he’ll be starting to think about which bits of CSC might be ‘surplus to requirements’.
