Any guesses on just how much more catastrophically awful it’ll be than you’re currently imagining?
31 replies (most recent on top)
The dude has a side hustle like everyone else at DXC.
When a big shot manager, business owner, entrepreneur, c-level, etc. has multiple business ventures it's fine. But the moment the peasants-- err, I mean employees have a side hustle it's considered high treason. It's a disgusting double standard.
https://en.wikipedia.org/wiki/Raul_Fernandez_(entrepreneur)
I looked up the CEO on Wikipedia - he is the vice chairman of worldwide sports. No mention of DXC at all on the Wikipedia page. AI does the conference call because he is busy elsewhere? The dude has a side hustle like everyone else at DXC.
Both the last CEO and the current one are below par. They then swamp the company with poor Execs like Drum, Rusl Jokes and Grey who just re invent different plans used before.
The next layers are full of Brocklehurst who are just yes men who processes and paperwork to stop real progress.
The managers below are just tickboxes for the Brocklehurst level.
All focus remains on cost cutting and wind down which they are good at.
This has been the strategy for the last 10 years.
Until they get someone who has done growth and investment in Employees the company will not change.
@13s Trade it for the short term swings if you want but don't mistake it for a long term hold.
No doubt - results are awful. DXC is a mismanaged company with poor fundamentals. But it trades at a 50 percent FCF yield (unheard of) so this could be priced in. DXC can be a bad company and an attractive stock - as long as the valuation is low enough.
@12c DXC’s buybacks are an admission that the company is out of credible growth opportunities and lacks leadership capable of putting capital to productive use. Instead of building their business, they are recycling capital back to shareholders for the shareholders to invest elsewhere and the company slowly contracts under the weight of its large debt obligations. This is managed decline dressed up as 'capital discipline'.
Going down this road further, DXC will be worth a small fraction of its current value within a few years. The core operational problems will remain untouched. Nothing fundamental will improve.
DXC is at the mercy of market forces and the market has none to give.
It's all just irrelevant numbers on a spreadsheet. Nobody cares about DXC. The numbers go up and down. And not a lot seems to change around here. People keep shuffling emails, and bashing out words that nobody reads. Basically it's forgotten or never knew how to run a business. And now focuses on entirely the wrong thing because it's easier!
It's not that simple though is it?
They've bought a lot of shares and retired a lot of debt and still the price continues to fall... A lot.
Ok. Now tune that up a little. What if DXC bought 400m a year of equity at 10 a share and instead paid down only 200 a year of debt for the next three years. That would leave 1.2bn of net debt and 1.8 of equity. 1.8bn / 50m shares equals 36 dollars a share.
The company has a value. It might be more or less than what it currently trades at - which is 1.3b of equity market cap plus 1.8 be of net debt. Let’s say for example - DXC is worth 3bn (which is pretty close to what the company trades at). Let’s say they continue to buy back stock and retire debt at the current rate - then in 3 years debt will be 1bn and if the 3bn is correct equity will be worth 2bn. Assuming 750 buyback at 10 a share in that time - would be 100 m shares. 2bn/100m is a $20share price. Which is almost a triple.
@ze Who would actually buy DXC’s country specific operations when you can simply poach their clients?? With very few exceptions, these are virtual offices with weak sales people and no real value generation.
@yn DXC has repeatedly bought back stock at $60, $50, $30, $20, $18, $15, $12, $10 and now $8. While each program temporarily supported the share price, none halted the steady decline. In retrospect, that capital may have been better allocated to strengthening the business and the operations rather than financial engineering. With over 80% of the value of the early buybacks already erased, if they were to reattempt to reissue the same stocks now they would be selling at steep discounts. This is how capital gets destroyed. It is value destruction.
As well as the obvious three reported pieces there is also geographic splits that could be made.
Selling a "country" is also possible.
CSC did it several times.
@xb This setup has been baked in since day one. There's no clean way to separate these businesses. They share infrastructure, customers, contracts, delivery centers and back-office. The 3 segments exist on paper. In reality, it's one tangled mess that's been impossible to carve up even before the CSC/HPE merger.
And let's be honest. They've already sold off everything that could be sold. Insurance is the closest thing to a spinoffable asset but if they sell that too,what's left is deadwood: a shrinking GIS book and a shrinking CES book neither with a growth engine. They'd be cashing out their only good asset (for cheap in this AI-crazed market) and stranding shareholders with the ugly runoff.
The breakup crowd is selling a fantasy that ignores operational reality, market reality and the fact that DXC has already pulled this lever as far as it goes.
Tell me if I'm wrong here, but share by backs decrease the outstanding share volume, which does two things 1)increase earnings per share (which is just a statistic when you aren't paying dividends) 2) by reducing the outstanding number of shares it should increase demand (price).
It doesn't seem to do this though.
It seems like 10% per annum revenue decline neutralises any buy backs.
For many years now it seems like eps growth has only one effect... Maintaining exec bonus payments.
If this keeps tracking like this we get to where?
Either the company gets to taking itself private or the fcf minus debt balances against the outstanding share capital and someone buys it because the numbers stack up to a profit?
Can anyone "add some colour" to this?
It’s 3 different businesses. GIS is declining as customers migrate to the cloud and due to pricing declines (outcome - lower prices every year). But - this throws off CF as the balance sheet is liquidated. The Apps business is ok but declining cause they are laying off lots of people. Insurance is a good business. As GIS declines, Apps stabilizes (or declines a little) and insurance grows - this thing throws off enough FCF to retire the capital structure in 4 years. (25 percent a year). There is value here.
@wr DXC is a melting ice cube. It generates cash today but it lacks a durable business model that justifies long term value and ownership.
It is burning down its capital base to buy time. Management is betting on a market turn but the market is turning in the opposite. Partners, suppliers and customers are taking the value DXC holds or once held. Its relevance is declining. Its book-to-bill consistently points to a shrinking revenue base. Without these fundamentals it is unable to sustain its share price. That is why its stock continues to decline year over year and its P/E sits at the bottom of its peer group.
In a terminal business buybacks do not create value. They accelerate capital depletion. Repurchases may mask EPS deterioration for a while but they do not stop DXC from being eaten alive.
FCF is cash generation. Debt retirement and share buyback are the retirement of the capital structure. The company is retiring 25 percent of its capital structure each year. Amazing.
An AI investor day - seriously? Why not spend millions more on sports sponsorships like Liverpool, Ferrari and the Capitals? Surely, without wasting those tens of millions of dollars GIS would be down more than 10 percent….why do reasonable folks allow this to happen.
@jq Babies the lot of you ! Do something , find a new employer or stay and be quite !
The good news for DXC investors is that stocks can only go to zero, so you know exactly how much you are going to lose on your investment. I think they should only present this slide at Investors Day with a projection of how much longer before the $0 mercy rule comes into effect, since the rest of their presentation will be BS anyway.
@dw This site is entirely dedicated to bi--hing about how bad your employer is. Either as a way of just venting or as a warning for anyone who's thinking of joining. Do you not think that pretty much everyone who's not seeking retirement in the next couple of years hasn't already gone. They have! The rest of us have completely checked out, and just bi--h on here. Don't like what you read - stop reading it you prat!
On average a DXC employee is now market valued at about $35,000 over their working life which, adjusted for inflation, is somehow far less than the resale value of a peasant with a strong back and two surviving chickens in medieval Russia.
Investors Day???? Who in their right mind would invest in this friggin'company? You might as well just light your money on fire.
and still the CEO and the board plus executives reap, huge rewards large salaries stock options bonuses. This has been going on for at least 10 years. The stockholders are all in bed with them. The analyst are so friggin stupid it’s ridiculous
If you don’t like the way you treat it go find another employer and stop being little babies about it.
The true FY27 free cash flow they do not show:
Free cash flow $600M Management guidance
Debt maturity ($400M) September 26 outstanding
Buybacks ($250M)
Restructuring ($100M) Estimated
Pension oblig. ($50M to $100M) Estimated
Gap ($200M to $250M) There’s no cash.
Fire people and the business dies.
Don’t fire people and the business dies.
Inspiring future.
The place is going to pot. They insist on all WBS codes and setup have to go through a dedicated team. Who presumably have to save all the emails as evidence and then action the request. As fast as they clear one, more arrive. It's taking months!
Why isn't this devolved to the PM's. We cannot bill clients because there is no WBS. And the staff are getting reluctant to work on projects with now WBS. It looks like they aren't doing anything so they might as well not do anything. Been here before - you do the work and find later you cannot get any overtime or even enough hours.
We create so many backlogs for ourselves, and insist on doing things the way they have always been done.
@cf You have to respect DXC's efficiency in vaporizing billions in market cap that quickly. They may not deliver results but they absolutely deliver consequences.
Given the continual downward trend from around $40 in 2021 to about $9 today, a simple linear projection would put the company at effectively worthless by around October 2027.
Psychologically, I think for many employees it’s already past the point of hope. People have mentally moved on. There’s little appetite left to pour energy into “saving” or “repairing” something that no longer feels valuable. Most either want it gone from their lives entirely, or replaced with something newer, more modern, and with a future.
If there’s a VR package at the end of this, many will likely stay long enough to extract at least some value after hanging on through years of decline. Walking away empty-handed after all this would feel difficult for a lot of people.
But if the expectation is that the company can simply be sold off and staff retained on minimal uplifts because “they’ll stay anyway”, I think that badly misreads the mood. If the possibility of VR disappears and people are just expected to carry on under new ownership, I suspect most will simply quit and move on. We've had enough warning. I for one have been saving hard for when the time comes.
Why should I care? No matter the results, if they are good, or bad, or whatever it doesn't affect me in the slightest.