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Computer Sciences (CSC) Tops Q1 EPS by 10c; Announces Two Acquisitions

August 11, 2015 4:17 PM EDT

Computer Sciences (NYSE: CSC) reported Q1 EPS of $1.11, $0.10 better than the analyst estimate of $1.01. Revenue for the quarter came in at $2.76 billion versus the consensus estimate of $2.82 billion.

Computer Sciences reaffirmed FY2015 guidance.

Fixnetix

CSC announced it has signed an agreement to acquire Fixnetix, a leading provider of front-office managed trading solutions in capital markets. The proposed acquisition will enable CSC to offer capital market clients an expanded range of as-a-service front office capabilities and will strengthen its ability to address growing client demand for greater efficiency and innovation in trading, market data, hosting, infrastructure, connectivity and risk management.

Capital market firms of all sizes are facing rapid change amid more stringent customer, regulatory and competitive requirements. With sophisticated systems that are often cost- prohibitive to run in-house, firms are looking to outsource the management and operation of trading systems’ infrastructure to become more agile, responsive to customers and cost efficient. Increasingly, they are turning to as-a-service utility models that leverage next-generation IT solutions to support global, ultra-low latency trading environments that are reliable, secure, have minimal risk and enable at-trade compliance.

Fixnetix streamlines front-office management and trading systems operations, market information systems and related technology infrastructure. With headquarters in London, Fixnetix also has operations in New York, Boston, Chicago and Tokyo.

“Fixnetix will be a key component to the implementation of our infrastructure strategy and will advance CSC as a leader in providing managed services to capital markets firms throughout the world,” said Steve Hilton, executive vice president and general manager, Global Infrastructure Services, CSC. “Our mission is to provide next-generation IT platforms and IT utility services that reduce cost and modernize industry services for our clients.

“This is a transformative market that is ready to embrace an as-a-service utility model, and CSC is uniquely positioned to make this happen with the addition of Fixnetix. While time to market will continue to be a competitive differentiator, security and availability remain vital; clients increasingly seek lower cost service delivery and usage-based pricing. With this acquisition our clients will gain access to an expanded range of as-a-service, front-office capabilities as we build on our commitment to provide reliable, cost-efficient technology infrastructure.”

Hugh Hughes, CEO and chairman of Fixnetix, said that “Aligning with CSC expands the global reach and scale of Fixnetix to better serve our global clients. For the last decade, Fixnetix has built a first-rate reputation within the global financial community. Becoming part of CSC represents the natural next step for Fixnetix. We will gain the resources that we need to better respond to market demand, effectively address bigger deployments, and build on our established success. CSC’s proven at-scale reputation to deliver across all industries will fundamentally bring greater credibility and presence to Fixnetix. We look forward to bringing CSC’s scale capabilities, application modernization, reliability and simplicity to our clients.”

“The new capital markets reality requires holistic service partners that can more effectively assist firms throughout the transaction life cycle and across asset class and geography,” says Larry Tabb, Founder and CEO of TABB Group a financial markets research and advisory firm. “The front-end strengths of Fixnetix combined with the delivery capabilities and balance sheet of CSC helps fill this need.”

The closing of the acquisition is subject to customary conditions. Financial terms of the agreement were not disclosed. Closing of the transaction is expected during the third quarter of 2015. The largest shareholder in Fixnetix is Delta Partners, a venture capital firm that invested in the company at start-up.

Fruition Partners

Additionally. CSC announced it has signed an agreement to acquire Fruition Partners, the leading provider of technology-enabled solutions for the service-management sector and the largest ServiceNow-exclusive service management consulting firm. The proposed acquisition will enable CSC to offer enterprise and emerging clients an expanded range of cloud-based service-management solutions to improve their business results through organizational efficiency and lower operating costs. ServiceNow is a CSC strategic alliance partner.

As global enterprises transition to the cloud, they are looking for better, faster and more efficient service-management capabilities across process, applications and infrastructure – both traditional and cloud-enabled. ServiceNow’s leading platform as a service is being adopted rapidly for that purpose and its growth represents a broader shift in the way that organizations use technology to manage work and business outcomes. Based on ServiceNow reporting, Morgan Stanley forecasts steady growth for ServiceNow with well over a billion dollars in revenue for FY16. For the years 2013 through 2016, IDC estimates an $11.6 billion market opportunity for professional and managed services around cloud-based platforms, a growing share of which will require deep knowledge of the ServiceNow platform.

Fruition Partners, which is also the only ServiceNow Master Solutions Partner operating in both North America and Europe, is the clear leader in practical application of ServiceNow and other cloud-based innovations within the modern enterprise. Combining the industry-leading expertise and proven track record of Fruition Partners with the scale, reach, industry penetration and extensive skill portfolio of CSC creates an extraordinary leadership position in the fast-growing enterprise software-as-a-service (Saas) market.

“CSC believes that innovative digital and cloud platforms including ServiceNow and other rapidly rising XaaS technologies like Salesforce and Workday are changing the way that professional services are delivered and providing huge opportunities for global enterprises - if implemented effectively and with vision,” said Jim Smith, executive vice president and general manager, Global Business Services, CSC. “Fruition Partners shares our vision and brings the ideal qualities needed to build and grow a worldwide cloud service management practice. These include solid growth, outstanding leadership and talent, breadth and depth of experience in cloud and ServiceNow implementations, an entrepreneurial and innovative culture, and an extensive blue-chip client list.”

“The combined CSC-Fruition Partners business is better positioned to help clients and the industry benefit from the associated ServiceNow growth and strengthens and scales the already compelling value proposition of our ServiceNow-based service management practice,” said Marc Talluto, co-founder and chief executive officer, Fruition Partners. “We intend to press this competitive advantage by cross-pollinating service offerings and best practices including pre-packaged accelerators and integrations, an exclusive shared ServiceNow knowledge base, and the world’s only fully managed ServiceNow application service offering.”

This acquisition will enhance the offerings and scale CSC provides to an ever-evolving client base through combined industry experience, advisory expertise, research and development investment, training capability and implementation resources. CSC boasts a 1,000-strong sales team aligned to key accounts worldwide, providing a significant boost to customer care for existing Fruition Partners’ clients.

Headquartered in Chicago with operations in the United States, Canada, United Kingdom and South America, the privately held company brings to CSC more than 300 practitioners covering ServiceNow, cloud development and service-management consulting capabilities; over 1,700 ServiceNow projects completed; and over 800 clients. As part of CSC’s Global Enterprise Solutions Consulting Group, it will join existing SAP, Oracle, Workday and Salesforce practices.

The closing of the acquisition is subject to customary conditions. Financial terms of the agreement were not disclosed. Closing of the transaction is expected in autumn 2015.

For earnings history and earnings-related data on Computer Sciences (CSC) click here.



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