Credit: Shutterstock photoThe recent contract win from the Federal Aviation Administration (FAA) reinforces the fact that, Computer Sciences CorporationCSC continues to foster a very strong business relationship with the U.S. government.
Recently, Computer Sciences announced that its team, which includes Amazon.com Inc.'s AMZN Amazon Web Services and Microsoft Corp.'s MSFT Azure, has won a multi-million contract to deploy cloud services at the FAA's data centers. According to Washington Technology, which broke the news last week, the contract "covers FAA's headquarters and the agency's nine regions."
Currently, the contract is valued at $108 million and is considered to have the potential to reach $1 billion over 10 years. Under the agreement, Computer Sciences and its team "will consolidate FAA data centers and migrate FAA data and systems to a hybrid cloud environment. The team will use the Computer Sciences Agility Platform cloud management tool to orchestrate efficient cloud deployment while leveraging alliance partners for data and cloud services."
The successful deployment of cloud services will help the FAA in reducing its overall IT costs and improve productivity.
Computer Sciences is one of the leading IT service contractors of the U.S. federal government. Approximately, 30% of its fiscal 2015 revenues came from government contracts.
For the past few years, Computer Sciences is focusing on the cyber business, cloud computing market and Big Data business due to growing demand. Clients increasingly prefer to rely on cloud-based services as it makes the IT system more agile and productive, which leads to considerable cost savings.
Computer Sciences has also made a few important acquisitions to build its cloud offerings. This also fulfills its strategy of enhancing exposure across government contracts. The company in Feb 2015 acquired a North California-based cloud infrastructure provider, Autonomic Resources. The company has strong exposure in providing services to the government agencies.
In Jul 2014, the company had acquired a small privately held company to enhance its cyber security, systems engineering and software development service offerings in the federal intelligence sector. We believe the company's continued acquisitions will make a good contribution to its North American public sector revenues in the long run.
Deal wins are catalysts for any company, and Computer Sciences has no dearth of them. Moreover, the company has contracts from different industry verticals.
It is to be noted that the company is in the process of splitting into two separate publicly traded companies. According to the company, one will "serve commercial and government clients globally" while the other will "serve public sector clients in the United States." The new businesses will be named as CSC Global Commercial and CSC US Public Sector.
Currently, Computer Sciences carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the broader technology sector is Mellanox Technologies, Ltd. MLNX , sporting a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
