Computer Sciences Corp., the Falls Church-based technology firm, announced last week that it would sell its credit services unit to Equifax for $1 billion as part of an ongoing effort to cut costs.
The company’s credit services division, which owns credit files for about 20 percent of the U.S. population, had been flagging in recent years.
“In many ways this was a very profitable asset ... it just wasn’t growing and frankly we thought it was not consistent with our long-term strategy,” Mike Lawrie, the company’s chief executive, said in a call with analysts.
CSC and Equifax, an Atlanta-based consumer credit rating agency, have partnered since 1998. Equifax conducted much of the research into consumers credit ratings, but CSC owned the actual data.
“Equifax has been doing all the lifting and the work,” said Carter Malloy, an analyst at Stephens Capital Management. “For them, it was a great move, and for CSC, it obviously freed up some cash.”
CSC said it will spend $300 million to $400 million of the proceeds to buy back its shares, and would contribute about the same amount to its pension plans.
The credit services unit is projected to bring in about $230 million in revenue this year, Lawrie said.
It’s been a rocky few years for the company, which lost billions of dollars in revenue last year. Cuts in government spending have also affected CSC, which counts NASA and the General Services Administration as public-sector clients.
Earlier this year, CSC said it was looking to sell off “non-core” businesses in an effort to cut $1 billion in expenses in 18 months.
The deal with Equifax is expected to close by the end of 2012.