It's well known from the Mikes playbook the only path he knows to growth is to cut, that's the only thing Mikey is capable off.
Until he goes the company is on a downhill path, his taken it from $26 billion to $13 billion in just under 4 years, on that basis in another 2 years the company will be too small to continue.
The shareholders need to realise Mike can't continue his not capable. Make that announcement now.
The Leadership only knows one way to 'grow' - and that's to slash expenses. It works in the short term, until you cannot service your clients any more, and you end up selling of bits and pieces to prop up the business and satisfy Wall Street, while you milk it dry, and then dump the husk and move on.
When your largest single expense is wages, your target is always people. As you move more and more from Innovation and Ideas, to Service and Support, you start to lose the 'NEW' things that you could sell at a premium, and you have to compete more and more on price. History shows this time and time again. Eventually, the new shiny expensive thing becomes a commodity, and other people can make it cheaper and faster. In order to stay at the top, you have to keep inventing new shinies...which means you need to keep your experienced, talented, innovated individuals. You cannot write instructions on how to come up with the next big thing. You cannot 'process' your way to a new idea.
Without that NEW thing, all you can do is drive for "efficiency" - deliver tomorrow what you deliver today, but for less than you spend today. For while, that works as there is always some dead wood that needs trimming. Meanwhile, your clients are expecting you to be more efficient (its often baked into the contract), and all your competitors are claiming they CAN deliver the same thing cheaper. Start to miss your deliveries, and your client will figure there is little to lose for trying the competition.
For while it works, but unless you invest that efficiency back into the company, and drive to find those new markets, new shinies, new approaches, eventually you end up where there are few efficiencies left to take, and things start to slip. Think honestly. What has DXC come up with in the last 5 years that is unique in the industry ? What sets it apart from all the competitors ? So, you have nothing new, and you're already struggling to deliver on what you've already promised, your only option is to offer an even lower price, and hence make less money, which will mean even less reinvestment, more missed deliverables...
There aren't many turnaround stories that have happy endings.
Apple (who dropped the Newton and came up with the iPod/iPhone/MacBook, but before that were essentially bankrupt)
IBM (In 1993, they pushed into Tech Services, and positioned themselves as a one-stop shop for business tech)
eBay (growth had stalled, mostly due to competition from people like Amazon. Invested heavily into mobile shopping, retailer partnerships and Paypal)
Priceline (was on the brink of being delisted as a NASDAQ stock - eliminated booking fees, pushed into higher margin markets, invested heavily internally to expand internationally).
All required investment, innovation and vision. Let me know if you think we're doing any of those things. Wall Street is finally seeing the inevitable spiral of reducing revenue, reducing assets, narrowing profit margins, lack of innovation, etc. It's been 4 years, the promised 'growth' has not happened, eventually there is no 'upside' for the vultures and they'll abandon Mike. He's no Steve Jobs or Lou Gerstner. He'll be replaced by a new mouthpiece, who'll promise big, reorganize, sell of bits until eventually they succumb to the same inevitable spiral.
As the old joke goes....prepare three envelopes.
Sadly I think Mike came in with the intent on filling his bank account without regard for the success of the company.
He and his team are clearly incompetent because they don’t understand the concept of happy employees lead to happy clients, which leads to more organic growth at existing clients and recommendations from those clients to new logos, which results in higher revenue and a higher share price.
If they followed a normal business model and took lower salaries and bonuses and more shares then passed on those dollars to employees, moral would improve at both the client and employee levels, revenue would increase and they could cash in those shares at a significantly higher value. But they don’t care, it’s pure greed and they are going to milk this cow until it goes bankrupt.
I left 20 months ago (and endured both Mike’s and too many years) and walked into my new company with a 40% higher salary, $20k signing bonus, and just had my first annual review that was both performance and compensation. Got another 5 figure annual bonus and another 5% pay increase. Employees love the company and the clients notice and also love the company which is why all DXC can win is low cost unprofitable table scraps.
I get there are people close to retirement that are riding it out but for anyone that can do it just look and solicit your CV. Mike and his buddies would rather give themselves all the money for raises and bonuses, lose clients, lose revenue and have to term employees, then do share buybacks so they can cash in their shares for nominal amounts compared to what they would get if they ran the company right; which is key, they have no business running a company and know it and just want to get as much as they can before it’s gone and they have to ride it out until they can do it again.
Glad to hear an analyst called out his lying a$$. You can expect more analyst aggression towards the lying incompetent BS going forward.
@1sig+1o6ZuHRC I have heard on 2 different town halls that a large proportion of contracts are due for renewal, and that we need to be pleasing the customers. They didn't state the names of the contracts.
With the over bureaucratic non producing layers who keep introducing new paperwork and the cutbacks in the productive layers the service has become poor, alot of cintracts won't be renewed.
So be prepared for a very rock 12 months towards the end of DXC.
@1vyi+1o6ZuHRC
Which contracts are coming up for renewal in the next 12 months?
The situation looks to be going from worse to worse.
Many contracts are due for renewal next 12 months, so will be surprising if DXC survives 15 months.
The management are so focussed on cuts than they aren't concerned about renewing or wining new contracts. You have to go the extra mile to renew, you have to please the customers.
The folks have to paid and motivated but has Mike has choosen to keep the employee money himself, this has worked for a short time but the end is now in sight as customers won't renew.
Goodbye Mike your play book has made you over $100 Million. Please hand it over now.
Is DXC Technology (NYSE:DXC) Using Too Much Debt? The WS analysts are very clear!!
https://simplywall-st.cdn.ampproject.org/v/s/simplywall.st/stocks/us/software/nyse-dxc/dxc-technology/news/is-dxc-technology-nysedxc-using-too-much-debt/amp?amp_js_v=0.1#webview=1&cap=swipe
Most of the guy's here just go from meetings to meetings. How do they polish the CV's? They cannot even polish their shoes.
They all expect a huge Wfr payout, but alas no one realized that there is no wfr in bankruptcy. More so, not much physical assets on the books to sell and pay wfrs.
Wake up guy's.
Sounds like polish up them CVs as DXC has around 18 months to 2 years tops remaining if Mike Salvino continues in place.
What a diee place to be.