Computer Sciences Corp. Cuts Jobs, Considers Sale
Computer Sciences Corp. on Tuesday said it plans to cut about 5,000 jobs, or about 6 percent of its work force, over two years and is considering selling the company, a provider of information technology services.
Its shares jumped $2.30, or 4 percent, to $59.59 in early trading on the New York Stock Exchange after rising to an new 52-week high of $60.09 earlier in the session.
Computer Sciences said its board has decided to explore the company's options for improving shareholder value, in response to recent expressions of interest, and has hired investment bank Goldman Sachs & Co. as its adviser.
The announcement came after The Wall Street Journal, citing unnamed people familiar with the matter, reported in its Tuesday edition that Computer Sciences is in talks that could lead to a potential sale of the company for $10.6 billion or more.
In Tuesday's announcement, Computer Sciences said it would cut 5,000 jobs from its work force of 80,000 employees as part of a major restructuring to improve the company's cash flow and earnings.
The restructuring plan involves 4,300 job cuts during fiscal 2007, which began Saturday, and 700 job cuts in fiscal 2008. Most of the reductions will come in Europe, the company said.
"For some time it has been apparent to us, and to other companies in our industry, that there is excess capacity in certain geographies, particularly Europe," Chief Executive Van Honeycutt said in a statement.
"After lengthy consideration, we have decided that this is an appropriate time to deal with the issue through a restructuring," Honeycutt said.
Computer Sciences expects to take a related charge of about $345 million this fiscal year and $30 million in fiscal 2008. Without those charges, the company expects the restructuring to save it about $150 million this fiscal year and $300 million in fiscal 2008.