WT Business Beat

By Nick Wakeman

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Nick Wakeman

New name for CSC-HPE as deal approaches

The combination of Computer Sciences Corp. and the enterprise services business of Hewlett Packard Enterprise is rapidly approaching and ahead of the April 3 close date the two companies have announced the name of the entity – DXC Technology.

So the decades old name of CSC will disappear as it and what is essentially the old EDS business that HP acquired nearly a decade ago are merged together. HPE will continue on as a seller of high-end technology products and solutions.

Once DXC launches in April it will be a $26 billion a year business with a wide range of clients, including a few billion in government work.

Its biggest government contract is likely the Navy NGEN contract to operate the Navy’s IT infrastructure. The recompete for that business is just getting underway.

The new company will be publicly traded, most likely under the symbol of DXC on the New York Stock Exchange.

The creation of DXC is just the beginning, of course. The plan for now is that the two companies will operate as different business units of DXC with their current management teams in place, which means that Marilyn Crouther, who runs the government business for HPE Enterprise Services, will continue in that role.

CSC chairman, president and CEO Mike Lawrie will retain those titles with DXC.

CSC has no U.S. government business having jettisoned that when it spun out the unit and acquired SRA International, creating CSRA.

A question has been whether the new company will retain the government business that CSC didn’t see fitting into its strategic vision.

When the CSC-HP deal was announced in May 2016, Lawrie said any decision on divestitures would be made after the deal closes. But the government market isn’t mentioned in its presentation breaking down the deal.

HPE was ranked No. 7 on the Washington Technology 2016 Top 100 with $3.5 billion in prime contracts, so it isn’t a small piece of business.

I don’t think it is automatic that they will divest. The market has changed and they may see more growth opportunities in the federal market. But we’ll have to wait and see as DXC moves forward in 2017.

Posted by Nick Wakeman on Feb 15, 2017 at 9:35 AM

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