Defense Spending Helps Boost CSC's Third QuarterDefense Spending Helps Boost CSC's Third Quarter

Increased spending on IT services by the Department of Defense helped boost third-quarter sales and profits at Computer Sciences Corp., the company reported Tuesday.

CSC, the nation's third-largest outsourcer, said revenue for the period ending Dec. 30 rose 2.5% to $3.58 billion, while net income jumped 29% to $203.5 million. Earnings per share increased 32% to $1.08. Sales to the Defense Department, one of CSC primary customers, climbed 12% to $820.1 million during the quarter.

CSC's entrenched position providing IT services to the Defense Department and related federal agencies has made it the subject of takeover speculation. Recent press reports have mentioned Lockheed Martin, Hewlett-Packard, and a number of private equity firms as possible buyers. To date, however, all talks aimed at a buyout of the company have fizzled.

Looking ahead, CSC said it expects full-year revenue of $14.6 billion for fiscal 2006, with per-share earnings falling between $3.27 and $3.21. CSC revealed $3.1 billion in new contracts in the third quarter. In a statement, chairman and CEO Van Honeycutt said the company is benefiting from "strengthening demand in the U.S. for shorter-term project work."