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The agreement requires CSC to provide the logistics support to the ‘Army command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) for worldwide sustainment services commodity line.’ These are some of the sensitive areas offering good business potential.
The two-year contract’s value is estimated at $220 million and comes under the Strategic Services Sourcing (S3) contract that was awarded to the company in 2006.
CSC is in the process of offering new products and services to tap new opportunities and similar contracts. Moreover, CSC’s new management team is taking the necessary steps to implement a multi-year strategy, which ultimately will help them to improve CSC’s competitive positioning. CSC is also focusing on proper execution of the projects in hand.
Restructuring, cost-control and new contract wins are some of the ways in which the company is trying to increase its earnings. Moreover, the company is also coming up with some new offerings to attract its government customers, which may increase the chances of repeat orders.
The company is taking new initiatives to build its position in the cloud computing space, although intense competition from both small and big players such as Accenture plc. ( ACN - Snapshot Report ) and Hewlett-Packard Company ( HPQ - Analyst Report ) is a challenge. This apart, CSC’s European exposure may affect its business.
Currently, CSC holds a Zacks #2 Rank (implying a short-term Buy rating).
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