Computer Sciences Corp said in a filing with the Securities and Exchange Commission that its board would be meeting today to consider its next move in trying to fend off Computer Associates International Inc’s advances. CSC says it will officially recommend a course of action to its shareholders on March 2. Also contained in the filing was the fact that CSC has won or implemented $6.7bn in large outsourcing contracts over the past 12 months. And as the revenue stream grows steadily for the services company, a sobering fact for CA is that more than 25% of CSC’s total anticipated revenues for fiscal 1999 are derived from outsourcing contracts that contain change in control provisions which would allow customers who are concerned about such issues to take their business elsewhere. Further, CSC says it has already been notified by a number of clients that they would most likely exercise such provisions or curtail the flow of new business to CSC should a CA takeover occur. In addition, the company points out, software critical to CSC’s data centers and other operations is licensed to CSC under contracts which are also terminable by the licenser if CA acquires CSC. And to make the takeover seem even less appealing to CA, CSC asserts that many of its employees – the main asset in acquiring a company such as CSC – would decline to join your company.
