CSC may lose $1.5 billion on NHS contract

Computer Sciences Corporation has warned investors that it may need to write-down up to £943 million ($1.5 billion) in its next financial quarter after it renegotiates its contract with the NHS to provide an electronic care records system.

CSC says that it recently learnt that both a memorandum of understanding with the NHS and a proposed contract amendment have been rejected by the UK government, and that it is currently discussing new "scope modifications and contract value reductions".

The company says this will force it to write down some of the money it has invested in the project in its next financial quarter. This could be as much as its entire investment – $1.5 billion as of November 2011.

That write-down would be another severe blow for CSC and its investors. In its most recent financial report, CSC was forced to write-down $2.6 billion worth of goodwill. This was due to the discrepancy between the company’s own valuation of its assets and its market value.

CEO Mike Laphan listed the ongoing difficulties with the NHS contract as one of the reasons why its share price is so low.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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