SAIC shares rise on 4Q earnings

NEW YORK (AP) ? Shares of SAIC rose 6 percent a day after the company posted fourth-quarter earnings that, excluding a huge settlement related to a payroll scandal in new York, beat most Wall Street expectations.

THE SPARK: SAIC, which provides technology for government and industrial customer recorded an adjusted profit of 31 cents a share Tuesday. Analysts polled by FactSet expected a profit of just 27 cents per share.

Revenue fell 8.5 percent to $2.49 billion, below average Wall Street estimates of $2.67 billion. SAIC said the loss provision from the settlement reduced revenue by $358 million.

SAIC also said it expects to post a fiscal 2012 profit of $1.26 to $1.36 per share on $10.7 billion to $11.2 billion in revenue. Analysts expect a profit of $1.38 a share and revenue of $10.7 billion.

The company also announced plans buy back up to $40 million in shares and start paying a quarterly dividend of 12 cents.

THE BIG PICTURE: A payroll program SAIC developed for the New York City far exceeded cost estimates, prompting a criminal investigation and the firing of three company officials involved in the project. Last week, the company agreed to pay more than $500 million in restitution and penalties to avoid federal prosecution.

The company also acknowledged that it didn't properly investigate a 2005 whistleblower complaint and employed managers who disregarded employee concerns and missed or ignored warning signs. SAIC also agreed to implement an ethics program.

THE ANALYSIS: James Friedman, an analyst for Susquehanna Financial Group backed his "Negative" rating and $10 price target for SAIC Inc., but called the company's plans to start paying a dividend a "good start."

Cowen & Co.'s Cai von Rumohr also backed his "Neutral" rating for the company, saying that the company's fiscal 2013 guidance looks "realistic" and "conservative."

THE SHARES: Up 80 cents, or 6.1 percent, to $13.94 in heavy midday trading, after peaking at $14.20 earlier in the day.

Over the past 52 weeks, the company's shares have traded between $11.06 and $17.65. Since the beginning of this year, SAIC shares have gained about 7 percent.

Source: http://news.yahoo.com/saic-shares-rise-4q-earnings-162747696.html

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