(By Balaseshan) U.S. technology services provider Computer Sciences Corp. (NYSE:CSC) reported a 78.1% drop in quarterly earnings due to lower revenue and tax expense as well as higher other expenses. However, results exceeded Street's expectations, sending its shares up 1.61% in premarket.
Earnings from continuing operations were $42 million or $0.26 per share for the first quarter, down from $186 million or $1.18 per share last year.
Revenue declined 1.9% to $3.96 billion due to a fall in North American public sector revenue, while revenue increased by 1% in constant currency.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.22 per share on revenue of $3.89 billion for the first quarter.
Managed Services Sector (MSS) revenue of $1.64 billion rose by 1% from last year and increased 5% in constant currency, mainly due to new contracts and the AppLabs acquisition.
Business Solutions & Services (BSS) revenue was $0.99 billion, an increase of 2% from the first quarter last year and 7% in constant currency, primarily due to the iSOFT acquisition.
North American Public Sector (NPS) revenue of $1.37 billion declined by 7.8% from the first quarter last year primarily due the completion of three Department of Defense contracts.
Operating margin increased by 16 basis points to 4.6% from the previous year and includes a restructuring charge of $27 million.
The company's negative free cash flow narrowed to $25 million for the quarter, from $403 million in last year. Operating cash flow of $221 million for the quarter, an improvement of $267 million from the previous year.
CSC closed Tuesday's regular session 1.55% at $25.52. The stock has been trading between $22.18 and $33.80 for the past 52 weeks.