Revenue jumps at ACS
- By John Moore
- Jan 27, 2006
Affiliated Computer Services reported a revenue surge of 31 percent for its December quarter and also announced plans to buy back as much as 45 percent of its stock from shareholders.
The Dallas-based outsourcing vendor had $1.35 billion in revenue for the quarter, compared to $1.03 billion in the same quarter a year ago. Net income grew to $103.2 million from the year-ago quarter's $96.1 million.
The growth of the company’s government business lagged its commercial side. Government sales increased 4 percent, while commercial business climbed 62 percent.
But the company’s government business will grow more in the future, according to Lynn Blodgett, ACS’ executive vice president and chief operating officer. The company has state health care projects in its sights, he said. ACS is eyeing 17 procurements during the next 18 months.
The company last year captured a five-year, $61 million contract with New Hampshire’s Department of Health and Human Service to design and implement a Medicaid Management Information System. Blodgett said ACS unseated incumbent Electronic Data Systems to win the deal. He also cited favorable protest decisions involving bids on health care-related contracts in North Carolina and Florida.
Company officials were considering selling ACS, but those talks ended earlier this month with no agreements reached. Now ACS's board has approved an offer to buy back as many as 55.5 million shares of its common stock. The outsourcer has a commitment letter from Citigroup Global Markets that will be used to finance the tender offer, according to ACS.
The company would purchase the shares at a price ranging from $56 to $63, giving the buyback a cost from $3.1 billion to $3.5 billion. The company's ability to meet the 55.5 million-share goal depends on shareholders offering that many shares for sale.