Thread regarding DXC Technology layoffs

@er "When a company has negative sales growth, it's likely to lower its capital spending. Receivables, provided they are being timely collected, will also ratchet down. All this "deceleration" will show up as additions to free cash flow. However, over the long term, decelerating sales trends will eventually catch up. "

Sound familiar?

Selling the only part of the business that’s actually growing and delivering a healthy margin without requiring constant restructuring capex is a guaranteed way to accelerate this company’s collapse. The firm is operating at barely a 1% operating margin. Its valuation isn’t depressed because of debt, it’s depressed because it generates negative return on assets and produces just enough cash to finance its own layoffs and share buybacks.

@ep Do you guys know anything about finance?

Free Cash flow means $ cash after paying for all expenses, everything.

The more of it you the better, pure profit.

The only thing you can argue would be they are making so much money by under paying employees and not investing in the business.

Lets be clear DXC is making aload of cash every year. I feel sorry for the folks who work there and are being taken advantage of.

Common descriptions of businesses with large free cash flows are that they are in serious decline with falling revenues and unable to invest...

Funnily enough that fits the scenario here.

Next time you hear about just how much free cash flow dxc is shouting about that, think of this post and what it means.

With a market cap of $2.27 billion and $2billion of debt thats a total of $4.47 billion total value.

If you had $4.47 billion you could buy DXC and generate net profit of $650million cash a year. Full pay back in 7 years, thats a bargain.

Wheres the money going, on useless leaders, share buy backs, and ????

The guys producing the money seem to be complaining they never see any of it.

Be clear DXC is profitable and generating a load of cash.

I still don't understand how dxc has low or zero profit contracts. Both M1 and M2 were cancelling those. How in all that time are we still doing bad business?

@dk your totally wrong, Insurance is a tiny piece, generates around $1.2billion revenue out of a total of $12 billion, profit is about $120million out out $650million.

Its not the golden egg you think so selling it off would be 10% of revenue and 7% of the profit.

The remainder of the business GIS and CES actually produce 90% of profit and revenue.

Sell it for $2billion and your debt free with a rehighly profitable company with $11billion of turnover and $530 million profit.

The share price would rocket.

@df If DXC sells Insurance, DXC isn’t generating cash, it’s burning it. Insurance makes the substantial part of the FCF. That’s why it’s valuable. This isn’t complicated, guys. Duh!

Sadly, this kind of low IQ reasoning is typical of the broader decision-making culture across all levels in DXC. It’s exactly why DXC keeps tripping over its own feet, runs as a low margin business with declining revenues.

I agree with the OP looks fairly achievable, if you offload the insurance its a debt free company making $400 million fcf, where talking Fcf not Ebit etc, pure $400 million cash profit.

Thats a straight 8-10billion value, equiv of $52 to $60 per share.

Doesnt even involve any hard work, its basic work for a decent Co and CFO, if i was a Private Equity i would be buying the shares for a takeover.

Big money to be made put of DXC.

No one is lining up to pay $60 a share. This company looks like a tired worn out operation running with a workforce beaten down by years of attrition and low pay, and a leadership pipeline that was WFR'd by the likes of Accenture and IBM in prior careers, VPs that haven’t inspired confidence in ages in any organization they worked for.

Investors can see the reality. The entire IT services sector has been repriced down by 50% this year alone and DXC has done nothing to earn an exemption. In fact, DXC is the one of the worst performers in its class.

At this point, the only way this stock is going is DOWN. And let’s be honest. Any CEO + CFO capable of pulling off a turnaround of this magnitude have far better offers than taking the helm of a junkyard corporate that’s been taking on water for decades.

At this point, the best DXC employees can hope for is that their ship can be steered to shore intact enough to be dismantled and salvaged for parts. Corporate leadership isn’t steering for the employee's benefit. They’re steering for the shareholders watching from dry land.

Its clear the Execs brough in are not credible.

They leaders have been in position for 8 years and still shrinking the company.

When you have a so called transformation thats that long it needs new leaders. The 2 Mikes, and Fernandez all have had 2 years each but proved not good enough.

They lose contracts, shrink employee pay, take millions in Exec payments, rinse and repeat.

You need leaders with vision, strategy, motivation, engagement, fair compensation and drive.

What's really holding us back from a $60 share price is a functioning time-sheet system.

Easier said than done.

The workforce is increasingly demoralised, largely due to the erosion of skills and the absence of meaningful investment in staff development. Many employees feel surrounded by colleagues who have disengaged, which in turn reinforces a culture of apathy and frustration.

Compounding this is a leadership team that appears disconnected from day-to-day operations. There is little clarity over project ownership, limited visibility of budgets, and an overall lack of coordination. Staff feel their concerns are neither heard nor respected, and this disconnect has resulted in projects losing direction and the organisation losing momentum.

The combination of declining morale, diminished capability, and ineffective leadership has created an environment where challenges go unaddressed and performance continues to suffer.

Agreed management are useless, Good plan would easily work, you havent factored in the recent $194 million award that they have won on the legal case from TCS which will wipe out another 10% of the current debt. It could be use for buying new companies. Once the share price gets around $60 i would buy acquisitions using shares and cash, less dilution at that price.

Are the current leaders are bothered about is lining their pockets.