DXC
DXC Technology Company
TMT, Event Driven/Special Sit
10/13/2016
Presented
| Date | 10/06/2016 |
| Price | $50.84 |
| Market Cap | $7.07B |
| Ent Value | $9.37B |
| P/E Ratio | 118.98x |
| Book Value | $14.03 |
| Div Yield | 0.01% |
| Shares O/S | 138.98M |
| Ave Daily Vol | 1,443,169 |
| Short Int | 4.98% |
Current
| Price | $20.37 |
| Market Cap | $3.68B |
| DXC Technology Company provides information technology solutions. It operates through the Global Business Services, Global Infrastructure Services segments. The Global Business Services segment provides technology solutions including consulting, applications services, and software. The Global Infrastructure Services segment provides managed and virtual desktop solutions, unified communications and collaboration services, data center management, cyber security, cloud solutions, cloudmail and storage as a Service, compute and managed storage solutions. The company was founded by Roy Nutt and Fletcher Roseberry Jones on April 16, 1959 and is headquartered in Tysons, VA. |
On April 3, 2017 Hewlett Packard Enterprise (HPE) announced that it successfully completed the separation of its Enterprise Services business, and merged it with Computer Sciences Corporation (CSC) to create DXC Technology (DXC).
Publicly traded companies mentioned herein: Accenture PLC (ACN), Computer Sciences Corporation (CSC), CSRA Inc (CSRA), Hewlett Packard Enterprise Co (HPE), HP Inc (HPQ)
Highlights
Following the successful split of its business in the fourth quarter of 2015, Computer Sciences Corporation’s (CSC) CEO, Mike Lawrie, stayed with the company. The presenter thinks Lawrie is an excellent manager and noted that he was the architect of the transaction that split SCRA (SCS’s government business) into a standalone. His previous experience as CEO of Misys and as a Partner at ValueAct speaks to the kind of value he can create for shareholders. Additionally, the presenter likes CSC’s CFO Paul Saleh as well. More recently, CSC announced its plans to merge with HPE’s Enterprise Services segment (May 2016) via a Reverse Morris Trust. The presenter believes the merger will drive meaningful upside for shareholders via cost and revenue synergies (estimated to be $1.5 billion annually one year out), as well as multiple expansion upon completion of the transaction (by March 2017). He estimates pro forma EPS to be in the realm of $6/ share (versus $2.75 for CSC alone in 2016 today) and is long the stock at $50 ahead of Hewlett splitting out the accounting for its services group, at which point he thinks the market will more fully appreciate the opportunity.
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