MCLEAN, Va. (AP) — Security and communications technology company SAIC said Wednesday that its fiscal second-quarter net income dropped 61 percent, hurt by costs related to its planned separation into two companies and charges tied to underperforming programs and contracts.
The company's results missed Wall Street's expectations, and it cut its fiscal 2014 outlook.
SAIC Inc. plans to split into two separate companies later this year. One, Science Applications International Corp., will handle information technology and other services. The other, Leidos Holdings, Inc., will focus on national security, engineering and other work.
For the period ended Aug. 2, SAIC earned $42 million, or 12 cents per share. That compares with $108 million, or 32 cents per share, a year earlier.
Earnings from continuing operations were 13 cents per share for the latest quarter.
Analysts, on average, predicted earnings of 22 cents per share, according to a FactSet survey.
SAIC said its quarterly performance was also weighed down by the effects of the automatic federal budget cuts.
Revenue fell 13 percent to $2.47 billion from $2.83 billion. SAIC said this was due to the winding down of some contracts, fewer U.S. troops overseas and a reduced government budget. These factors were somewhat offset by better results from the health and engineering segment, which was helped by the acquisition of maxIT Healthcare Holdings Inc.
Wall Street was looking for revenue of $2.54 billion.
SAIC now foresees fiscal 2014 earnings from continuing operations between 95 cents and $1.03 per share on revenue in a range of $9.7 billion to $10.2 billion. Its prior guidance was for earnings from continuing operations between $1.16 and $1.33 per share on revenue in a range of $10 billion to $10.7 billion.
Analysts expect full-year earnings of $1.14 per share on revenue of $10.37 billion.
Its shares closed at $15.15 per share in trading Tuesday.