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5 Keys To Understanding DXC's Planned Divestiture Of Three Businesses

The three businesses combined offer a multitude of services and solutions aimed at solving some of the most important challenges facing business and public sector customers, but DXC hopes their divestiture will help solve some of its own challenges.

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Looking For Growth In Uncertain Times

Mike Salvino, the new CEO of DXC Technology, said this week that the company plans to divest itself of three of its business. The move will let DXC better focus on its core business, Salvino said during his first quarterly financial analyst presentation since he took the reins in September.

2019 has been a tough year financially for DXC, the Tysons, Va.-based global solution provider formed from the April 2017 merger of HPE Enterprise Services and CSC. The company's share prices started 2019 at $52.28 per share, down from its peak the year before of $96.26 per share. During the year, they peaked at $68.89 per share in February, but then gradually fell to the mid- to upper-$20 range by November.

DXC this year has faced several issues, including three major legal battles including one based on alleged management fraud, a fight with its former parent company Hewlett Packard Enterprise over an expected payment, and the replacement of its CEO.

[Related: DXC Technology Planning To Divest Three Of Its Businesses]

For its most recent fiscal quarter, DXC, ranked No. 3 on the 2019 CRN Solution Provider 500 list, reported revenue of $4.85 billion, down from the $5.01 billion it reported a year ago. The company also reported a GAAP loss of $2.12 billion, or $8.19 per share, compared with last year's net income of $259 million, or 93 cents per share. On a non-GAAP basis, the company reported net income of $362 million, or $1.38 per share, down from last year's $573 million, or $2.05 per share.

Salvino said there are several areas where DXC needs to improve, including getting its delivery teams to execute the most complicated phase of operational cost improvements, focusing more on strengthening its employees, zeroing in on selling integrated solutions, and taking better advantage of its IT outsourcing business.

Here is an in-depth look at how DXC plans to change its organization and the potential impacts of those changes.

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