From what I see there's a one off
Gain on disposition of businesses of $377 million
So if you take that out I make it a loss of -$99 million
Revenue is also down 8% per quarter, so 32% per year, if you keep shrinking the company at that rate the book to bill will rise.
So the company has gone from $26 billion turnover to $16billion over the last few years hardly a success and no great sign of a turnaround yet in revenue.
I don't know how many lovers he's taking cross-country to see his growth but if they all go offshore, they will sink.
There is no long-term DXC plan. Only a DXC forecast which predicts a further 1-2% and maybe some feel-good idea that growth might start in 2024/25 by which time the only people who will remain, will be those in their 70's still waiting for their payout, the receivers and a small tortoise named Bob.
Mikey 2 spoke about two lovers for growth the Global Innovation delivery centers formerly called digital Technology Centers and automation! First of all how much profit can you make offshoring from high cross country HCC to low-cost country lccc there's a limit to that. Secondly the exceed does not have a one-size-fits-all solution that can scale it's a whole bunch of custom scripts or power point there's no way that they can scale automation what they do have one client to another client. There's no long-term top-line growth here margin growth or anything growth
How many cost levers can they keep pulling?
In reality they mean we can keep s4rewing the staff till they squeak. That's what they mean by pulling levers.
2017 DXC forecast $24B revenue amid bell ringing and balloons.
2018 - $21.7B
2019 - $20.7B
2020 - $19.5B
2021 - $17.7B
Are we there yet?
The following was mentioned during the earnings call - any idea with whom we executives a $3B take-or-pay deal?
During the quarter, we paid $88 million to draw to conclusion a long-standing $3 billion take-or-pay contract for IT hardware. These types of contracts are not efficient, and we are reducing our exposure.
If Henry Ford asked his customers what they want? They would have said a bigger horse that eats less food that can work more hours per day they wouldn't say a tractor or a truck
Mikey 2 is no Henry Ford and that's the problem
Mikey2 says that we are in the Ito Information Technology Outsourcing business because that's what our clients want. That's the problem that dxc does not have an identity or a window into the future. Why would I want to continue to do business with this company when there is another company with a window into the future and is going walk that way with me?
Mikey2 says let's go back to the technology stack. that technology stack doesn't point to the Future.
Revenue is flat or declining and all you can do to improve margin is reduced cost by closing data centers getting rid of contractors replacing them with low-cost employees shifting work to India what do you do when you don't have any more levers to pull? Increase the utilization of delivery centres and automation? Let's get real how much automation is there really in computers that's going to generate 20 billion dollars of Revenue without customization? They don't have a turnkey piece of software worth 5 billion dollars or 50 billion. Somebody is lying or stupid
Fair enough, revenue from Outsourced IT provision is dropping everywhere not just at DXC. Let's face it, most clients are moving to Hyperscale Cloud provision.
But, all of DXC's major competitors have managed to replace this revenue stream with something else, whether in consultancy, development, service management, or other areas.
No-one else in the industry has managed quite such a spectacular fall in revenues over such a sustained period. It's actually quite impressive that management have been able to shrink the company so much, so fast.
What DXC needs to remember is that you can only cut your way to profits in the short term. For long term profit you need revenue stability as a minimum, and ideally good levels of organic revenue growth - with the occasional acquisition to really push the numbers up.
Its easier for a small company to increase revenues & revenue growth isn't everything. I'd rather work for a smaller business that has decent margins, profit & dividends...
i'm sure the DXC shareholders are delighted with the current $41 share price (after hours and after the results were announced). That gives DXC a market cap of $10B, exactly same value they turned down from ATOS 6 months ago.
If DXC investors had accepted that offer, and then re-invested all their money in Accenture stock their $10B would be worth $12.5B today, or if they went for Facebook $13.4B, but who needs another $2.5-$3.4B when you can hold stock in a company that's entering an exciting "foundation phase, and leaving stabilization behind ..."
Dont worry share price will continue to inflate on the back of Deutsche Bank recommendations. They recommended a hold at $91. So only 50% of their clients value has been eroded.
So a $361M drop in revenue compared to same quarter last year, a 8% drop which is quite an achievement given same quarter last year saw a 7.9% drop in revenue just as Covid pandemic was really starting to hit businesses.
Don't worry though because "“With the stabilization phase of our transformation journey behind us, we are now moving through the foundation phase ..."
So let the "foundation phase" continue with a rather brave forecast of only 1-2% drop in revenue for the whole FY22 to about $16.6-$16.8B revenue - about $10B lower than what DXC started with in April 2017.
It's 8% year on year decline, not every quarter.
Still bad enough If nearly 10% of the company is shrinking, far from a expanding company with positive outlook and opportunities.