Tech stock under pressure: DXC Technology Co (NYSE: DXC)

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DXC Technology Co (NYSE: DXC) stock rose only over 1% on 24th May, 2019 (as of 11:13 am GMT-4; Source: Google finance) after the company posted mixed results for the fourth quarter of FY 19 and raised its dividend. The company has reported fiscal fourth-quarter net income of $271 million compared with $560 million in the year-ago period. The company posted the adjusted EBIT of $827 million in the fourth quarter compared with $882 million in the prior year. Adjusted EBIT margin was 15.7% compared with 15.8% in the year ago quarter. DXC generated the adjusted free cash flow of $917 million in the fourth quarter. But, the company had reported 1 percent decline in the adjusted revenue to $5.28 billion in the fourth quarter of FY 19, missing the analysts’ estimates for revenue of $5.31 billion.

DXC in the fourth quarter of FY 19 has reported the adjusted earnings per share of $2.19, beating the analysts’ estimates for the adjusted earnings per share of $2.09, as per the analysts surveyed by FactSet. In constant currency, the Digital revenue grew 22% year-over-year and 11.6% sequentially in the quarter. The fourth quarter Industry IP and BPS revenue fell 1.4% year-over-year and was approximately flat sequentially. In the fourth quarter, the Digital book-to-bill was 1.8x and the Industry IP and BPS book-to-bill was 0.9x.

Tech stock under pressure: DXC Technology Co (NYSE: DXC)

For the fiscal first quarter 2020, analysts model adjusted earnings of $2.20 a share on sales of $5.14 billion. DXC said that it was also raising its dividend to 21 cents a share, which will be paid on July 16, 2019 to stockholders of record at the close of business on June 5, 2019. During the fourth quarter, DXC had returned $142 million to shareholders, that includes $51 million of common stock dividends and $91 million in share repurchases

On the other hand, DXC Technology has planned to acquire a New Jersey data centre from Credit Suisse through its data centre colocation services subsidiary. This is to capitalize on their existing infrastructure assets, to participate in the digital technology trends and opportunities that will boost better business outcomes. The transaction will expand the existing market presence of DXC to serve its enterprise clients with critical infrastructure solutions with proximity to the New York metropolitan market, which is a major hub of operations for global financial institutions and other businesses. This acquisition will support the clients who are transitioning to the cloud and employing new digital migration strategies for their changing infrastructure needs. Further, the acquisition will use DXC’s strength in reducing the client workloads and meeting the co-location requirements of enterprise and government clients.

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