(Reuters) - Computer Sciences Corp’s CSC.N new CEO vowed to turn around his struggling firm as it posted an annual loss of $4.2 billion, saying he is working hard to lay the groundwork for a return to profitability.
“These results are very poor. They are unacceptable,” Chief Executive Mike Lawrie said on the technology services firm’s earnings conference call Thursday. “We are taking immediate actions.”
Lawrie, a former IBM executive who took the helm at CSC in March, said he would cut expenses by $1 billion over the next 12 to 18 months, look at selling “non-core” assets, and quickly assemble a new management team to help engineer the turnaround effort.
One focus area has been renegotiating a multibillion-dollar contract to implement a system for managing digital medical records for Britain’s National Health Service. CSC has been losing money on the contract. Lawrie said he expected to sign an interim agreement amending the terms of the pact in the “not-too-distant future.”
The company has uncovered about 40 other troubled contracts and is in the process of taking steps to remedy those problems, he added.
CSC shares fell 2.2 percent to $25.83 in midday trading on the New York Stock Exchange, about double the percentage decline in the Nasdaq Composite Index.
The company posted a loss attributable to common shareholders of $158 million, or $1.02 per share, for its fiscal fourth quarter ended March 30, compared with a year-earlier profit of $171 million, or $1.09 per share.
Revenue fell 2.1 percent to $4.1 billion.
Lawrie attributed the company’s problems to the NHS contract, difficulty managing costs, and “headwinds” in its business with the U.S. government and in Europe.
”Our company is in a turnaround situation and we are taking the first steps,“ said Lawrie, an IT industry veteran whose career includes 27 years at IBM (IBM.N). ”This will be a multi-year journey.
CSC, which named a new CFO on Monday, said it would hold off issuing full-year earnings projections until later this year.
The company promised to provide an in-depth update on the status of its turnaround at an investor meeting scheduled for September 10.
Reporting By Jim Finkle; Editing by Maureen Bavdek and John Wallace