DXC Picks Interim CEO Raul Fernandez As Permanent Leader

‘While our company has an impressive collection of assets, technology, and people, it's clear that we need to sharpen our execution and accelerate our performance. To accomplish this, we're going to continue the full implementation of our operating model, establishing global offerings with full responsibility for offering development, delivery, solution design, and P&L accountability,’ says new CEO and President Raul Fernandez.

DXC Technology Friday used its fiscal third quarter 2024 financial analyst conference last week to unveil Raul Fernandez as its new president and CEO.

Fernandez has been serving as interim president and CEO of Ashburn, Va.-based global IT services provider DXC since December 2023 when former DXC President and CEO Mike Salvino vacated his role.

DXC at the time gave no reason for Salvino’s decision to step down from his role. However, he said he will remain with DXC until March 31 to help with the transition to a new CEO.

Fernandez, during his prepared remarks to financial analysts during the company’s third fiscal quarter 2024 quarterly financial conference call, introduced himself as the new president and CEO.

“In my first 40-days plus, I've met with employees, customers, partners, and investors,” he said. “As a director, you get a good sense of the business, its values and its challenges. But as an operator, you get to go deeper and fully appreciate the talents, technologies, and great work that our employees do every day around the world. You also get a really good sense of how we can work smarter and elevate our performance. In the last 40 days, I have learned to more deeply appreciate the mission-critical nature of the work our employees do on behalf of our clients, the digital systems that we build and implement, and the technology and software that we operate for global brands.”

Fernandez said the foundation of DXC’s business is service delivery excellence, but that it needs to do better to focus on delivery and customer satisfaction.

“While our company has an impressive collection of assets, technology, and people, it's clear that we need to sharpen our execution and accelerate our performance,” he said. “To accomplish this, we're going to continue the full implementation of our operating model, establishing global offerings with full responsibility for offering development, delivery, solution design, and P&L accountability. In addition, we will sharpen our sales execution through a geographic market-based sales team. This will enable us to develop market-leading offerings with the right solutioning and pricing and with local sales execution.”

Fernandez said he has found that multiple compelling attributes of DXC are either under-appreciated or unknown outside the company.

“We'll change this by doing a better job of highlighting each of our six offerings, showcasing how we tailor our services to empower customer success,” he said. “We will emphasize the unique value we deliver, and highlight our competitive advantages with much greater clarity. As CEO, it is imperative to stay closely connected to our employees and our customers, as they have great ideas and insights that can be harnessed to take the company to the next level. I'm going to invest the time to get this feedback on an ongoing basis.”

Fernandez was not available to further discuss his new role with CRN by press time.

The change at DXC’s executive suite comes at the end of a rough year-plus for DXC.

DXC, ranked No. 10 on CRN’s 2023 Solution Provider 500, Thursday reported third fiscal quarter 2024 revenue of $3.40 billion, down 4.7-percent over the same period in fiscal 2023. Non-GAAP earnings for the quarter were 87 cents per share, down from last year’s 95 cents.

DXC in November also reported that revenue for its second fiscal quarter 2024 fell by 3.6 percent year over year to $3.44 billion, while its non-GAAP earnings fell 5 cents year over year to 70 cents per share.

In September 2022, at least one private equity company was in talks to acquire DXC. However, DXC in March said it terminated the acquisition discussion.

DXC in March was hit with an $8 million fine by the U.S. Securities and Exchange Commission related to the solution provider making misleading disclosures related to its non-GAAP financial performance between 2018 and 2020.

The company’s stock has not fared well either. Shares have plummeted by over 78 percent since a high of $96.38 was achieved in September 2018, nearly a year after it was spun out from Hewlett Packard Enterprise.

DXC in December also named David Herzog, the company’s lead independent director, as its new chairman.

DXC in a regulatory filing said that Salvino is entitled to receive severance pay in accordance with his employment agreement and termination without case. For termination without cause, according to a regulatory filing this past June, Salvino was eligible for $13.2 million in payments, which includes a $9.7 million cash severance benefit.

Had an acquisition of DXC occurred, Salvino would have been eligible for $63.9 million in cash- and equity-based payments in the event of change in control of the firm, according to that same U.S. Securities and Exchange Commission filing.

For its fiscal third quarter 2024, which ended December 31, DXC reported revenue of $3.40 billion, down 4.8 percent from the $3.57 billion the company reported for its fiscal third quarter 2023.

That included revenue for its Global Business Services segment of $1.70 billion, down 2.4 percent over last year, and Global Infrastructure services revenue of $1.70 billion, down 6.8 percent.

In terms of DXC’s six technology offerings, analytics and engineering revenue for the quarter was $555 million, up from last year’s $535 million; applications revenue was $759 million, down from 762 million; insurance, software, and business process services revenue was $382 million, up from $371 million; security revenue was $109 million, down from $112 million; cloud, infrastructure, and IT outsourcing revenue was $1.17 billion, down from $1.28 billion; and modern workplace revenue was $426 million, down from $433 million.

DXC reported GAAP net income of $140 million or 81 cents per share, up from last year’s $61 million or 25 cents per share. On a non-GAAP basis, the company reported net income of $151 million or 87 cents per share, down from last year’s $224 million or 95 cent per share.

Looking ahead, DXC expects fourth fiscal 2024 revenue to fall by between 5.5 percent and 6.5 percent compared to last year. The company also reduced its full fiscal 2024 guidance to reflect expectations that revenue will fall by between 4.3 percent and 4.5 percent.

David Harris assisted with this article.