And why some here would want that to happen?
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@1ija+1iQbuIeq Generally I think this is the correct anyalisis the real art here is about figuring out what all the parts of DXC is worth. IF DXC actually does generate $1.5 Billion in free cash flow (I relise this is a big if) I would argue that $30 is too conservative given that the market cap would only be around $8 Billion and the Free Cash Flow yeild would be well above 10%. Its also not completely crazy to think they might be able to pull it off given free cash flow improved by $1.5 billion last year to get to $700 million. From there the question becomes can they maintain the buisness. You obiously have a compelling case for no given the previous track record. But I dont think private equity is thinking that far ahead. Just my 2 cents.
@1rkn+1iQbuIeq I respectfuly don't agree. Non-GAAP is extremely common and practically every large corporation provides Non-GAAP figures and a reconciliation between GAAP and Non-GAAP. This is true for DXC aswell. Yes I agree it can be misleading but its not evidence of fraud. DXC is audited by Deliotte a well respected auditor this also lends a little bit more credibility although obiously it isn't a perfect science as we saw with Arthur Anderson and Enron. For what its worth I also really like Ken Sharp I think he's a good CFO. He's relatively new to DXC and I don't think he'd risk his career to come to DXC just to commit fraud. I freely admit I could be wrong as I see posters on here claiming fraud frequently but I need see more evidence than what people post on a website literally called "the layoff".
CSC was offshoring long, long ago and was cutting jobs during the 2000's and teens. DXC then cut the onshore, offshore, nearshore, any shore they could find, that left the future path for employees and customers totally unsure.
The company lost 11% of its stock this week (6 times more than it would lose in a month). Investors have lost 65% over 5 yrs listening to tales of the ship about to turn and don't worry, there will be Jam tomorrow, honest. I am sure even if this PE rumour turns out to be anything, the small investors will accept anything over 30 now. Much better to sell off the parts now, as the value of the parts will be greater than the sum of the whole.
See https://finance.yahoo.com/news/makes-dxc-technology-dxc-lucrative-124712900.html
"last year DXC generated $700 Million in free cash flow which is greater than 10% of the market cap."
DXC also talks a lot about non-GAAP profits; ie. shady-a-f accounting practices. If DXC says it, don't believe it.
@1wzb+1iQbuIeq Thats reasonable, do you have a source you recommend? What job review sites are popular in say europe?
I'd caution any investor about relying on any of the english language US centric web sources to evaluate morale in DXC... given that the bulk of the employees are not American or necessarily hanging around english language internet sources.
Even non-UK europeans are less likely to be seen on any of those sorts of places, let alone the bulk Asian staff base.
I'd also offer some further insider wisdom for you - offshoring is nothing new to this place. Offshoring happened in CSC from the early 2000's and it cut DEEP. The sixty thousand Indians CSC had appeared over night and matching numbers of jobs were shed outside of Asia. Then Lawrie came in and didn't offshore anything - he just cut, including offshore. Those cuts were never built back under Salvino and now he's chasing further cuts.
At the rate this is going its probably only a couple of years before this business ceases to exist.
Anyone trying to buy it will see the same, therefore the offers will be fire-sale low because while there are some nuggets in the dross, the nuggets are worth less than what you'd have to pay for all of it.
Might as well wait to pick up the nuggets as DXC sells the family silver to try and stay afloat (which it won't)
Amature investor here- I belive the the logic is as follows, last year DXC generated $700 Million in free cash flow which is greater than 10% of the market cap. This year they expect to do the same. The real question is will DXC generate $1.5 Billion in free cash flow that they are guiding to for 2023? If they pull that off an investor would get a yeild of 25% which gives you a lot of room for error. Then you break up the buisness and sell off various pieces and I think the sum of the parts is greater than the whole. I wouldn't expect anything to come from it because Sal is probably going to reject a deal that doesn't give a large premium over the current price. In terms of employee moral most investors don't look at web forums like this. They're more likely to look at a website similar like indeed and the reviews are more mixed than you would expect. Also for what its worth employees in India and the Phillipines appear to have somewhat positive opinions suggesting that DXC is trying to move to an offshore model and that's the root cause for much of the anger. I'm sure you guys think this is all B.S and you probably are right. But I think this is the general logic.
A lot as they can get lots of assets for almost nothing, they can get a customer base and they can lay off most of the people and do it themself for lower cost