DXC Technology is seeking to sell three business units to sharpen the IT consulting and services company's focus on digital revenue growth, CEO Mike Salvino disclosed on DXC's November 11, 2019 earnings call.
Related Update - March 10, 2020: DXC sells some assets for $5 billion.
Salvino placed the potential asset sales within the context of DXC's overall digital business strategy.
The three business units up for sale, which represent 25 percent of DXC's overall revenues, include the company's:
- U.S. state and local health and human services business;
- Business Process Services (BPS); and
- Workplace and mobility business.
"These businesses are strong. Our workplace and our U.S. state and local health and human services businesses are market leaders, and we have meaningful IP in our horizontal BPS business," Salvino said.
Potential DXC Asset Sales: More Details
Details about the potential asset sales surfaced amid weaker-than-expected revenues and earnings for DXC's Q2 fiscal 2020 financial results, announced yesterday. Revenue was $4.85 billion for the period, about $70 million short of Wall Street's expectations, SeekingAlpha estimates.
Further explaining the potential asset sales, Salvino added:
"When I say strategic alternatives, that could involve a range of actions to unlock value including potential divestitures to strategic or financial buyers, a spin-off or other transactions. Throughout this process, we will remain closely engaged with our customers and our people, ensuring we are meeting our commitments to both."
Assuming DXC manages to sell those businesses, DXC's post-deal business mix by fiscal 2022 would generate more than $15 billion of revenue, with at least half of the revenue coming from digital offerings, according to CFO Paul Saleh.
DXC Business, Leadership Evolution
DXC Technology is a 2017 merger of the former Computer Sciences Corporation (CSC) and the Enterprise Services business of Hewlett Packard Enterprise. The company named Salvino as president and CEO after delivering disappointing financial results in September 2011. He succeeded Mike Lawrie, who retire as the company's board chair on December 31, 2019.
DXC has spent recent quarters acquiring various cloud, IT consulting and digital services businesses that focus on ServiceNow, Salesforce, SAP, Microsoft Dynamics, and data center skills. The buyouts include Tribridge, Logicalis SMC, System Partners, TESM and BusinessNow; Luxoft; an EG A/S services arm; a Credit Suisse data center; and Syscom.
DXC's acquisition strategy is somewhat akin to Accenture's M&A moves. Accenture has spent heavily to acquire digital, cloud, and cybersecurity companies worldwide.