CSC to split in two, spin off US public sector work

Computer Sciences Corporation, founded in 1959, is becoming two companies

IT services vendor Computer Sciences Corp. plans to separate its US$4.1 billion U.S. public sector business to form a new company, it said Tuesday.

The move is the latest step in a restructuring that began three years ago and will see CSC's mission divided between U.S. government clients and all others.

The U.S. public sector business, expected to be operational by October, will target federal, state and defense customers and employ 14,000 people. That business generated $4.1 billion in revenue last year.

CSC's remaining 51,000 employees will focus on commercial customers, and public sector organizations outside the U.S. That business recorded revenue of $8.1 billion last year.

The split will happen at about the same time as that of another aging tech giant, Hewlett-Packard, which is also breaking in two. CSC was founded in 1959, while HP was founded 20 years earlier.

HP is cleaving its PC and printing divisions away from its enterprise hardware and service businesses, an effort to stimulate growth and make its shareholders happier.

While the two CSC businesses are very different in size, they're about evenly split when it comes to profitability. In the fiscal year just ended, CSC's public sector work in North America earned it operating income of $591 million, versus $567 million for the rest of its business.

CSC said it's making the split because government clients are looking to work with companies that have specific experience in government work. The new businesses will be called CSC Global Commercial and CSC US Public Sector.

In late 2014, CSC said it would pay US$190 million to settle a case brought by the U.S. Securities and Exchange Commission over four-year-old charges that it violated U.S. antifraud, reporting, and books-and-records laws. At issue was the way it accounted for work in Australia, Denmark and the U.K.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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