SAIC (SAI) Moves Higher as Plan to Split Could Unleash Growth
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Shares of Science Applications International Corporation (NYSE: SAI) are surging after-hours Thursday after reporting mixed financial results for the fiscal second quarter 2013 but announcing plans to split the company.
The board gave management authority to split the company into two publicly traded companies. One company would focus on technical services and another on information technology products, including surveillance and intelligence programs. The spinoff is an effort to prevent conflict of interest, said John Jumper, chairman and chief executive officer. He also thinks it will "unleash growth and value."
"In this next step of our strategic plan we configure ourselves for the future. Our two new companies will be designed so that their businesses can be more differentiated and more competitive in their own space. More importantly, that addressable space will expand for each as we eliminate the burden of organizational conflicts of interest (OCI)," said Jumper.
On the quarter, revenue was reported at 2.85 billion, better than analyst estimates of $2.65 billion. Last year the company reported revenue of $2.6 billion. The largest sector gain was in defense, which grew at a rate of 14 percent.
Despite the top-line beat, at 32c EPS missed estimates by a penny. Midpoint EPS guidance was $1.31, slightly below the consensus of 1.34, (SAI sees FY2013 EPS of $1.26-1.36) but revenue projections were above consensus (SAI sees FY2013 revenue of $10.9-11.4 million vs. consensus of $10.90 million.)
Shares of SAI last traded at $12.96, up 9.7 percent.
The board gave management authority to split the company into two publicly traded companies. One company would focus on technical services and another on information technology products, including surveillance and intelligence programs. The spinoff is an effort to prevent conflict of interest, said John Jumper, chairman and chief executive officer. He also thinks it will "unleash growth and value."
"In this next step of our strategic plan we configure ourselves for the future. Our two new companies will be designed so that their businesses can be more differentiated and more competitive in their own space. More importantly, that addressable space will expand for each as we eliminate the burden of organizational conflicts of interest (OCI)," said Jumper.
On the quarter, revenue was reported at 2.85 billion, better than analyst estimates of $2.65 billion. Last year the company reported revenue of $2.6 billion. The largest sector gain was in defense, which grew at a rate of 14 percent.
Despite the top-line beat, at 32c EPS missed estimates by a penny. Midpoint EPS guidance was $1.31, slightly below the consensus of 1.34, (SAI sees FY2013 EPS of $1.26-1.36) but revenue projections were above consensus (SAI sees FY2013 revenue of $10.9-11.4 million vs. consensus of $10.90 million.)
Shares of SAI last traded at $12.96, up 9.7 percent.
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