Shawshank, VA 6/1/12 (StreetBeat) -- Shares of SAIC Inc. (NYSE: SAI) rose in premarket trading Friday after the company posted better-than-expected first-quarter results and backed its guidance for the full year.
The company, which is based in McLean, Va., provides scientific, engineering and other services to the U.S. Department of Defenseand other government agencies, as well as companies. Potential cuts to the government budget for defense have weighed on SAIC's shares, which are down 36 percent over the past 12 months.
SAIC said late Thursday that its profit for the quarter ended April 30 fell about 10 percent, to $114 million, or 35 cents per share, because of some higher costs. Still, analysts polled by FactSet expected a steeper drop, to 33 cents per share.
The company in March agreed to pay about $500 million in restitution and penalties to avoid federal prosecution related to the CityTime payroll program. The project, which SAIC developed for New York, far exceeded cost estimates, prompting a criminal investigation and the firing of threecompany officials involved. SAIC said that cash used by operations was $361 million during the quarter because of its payments in that settlement.
In the quarter, revenue rose 3.5 percent to $2.78 billion, when analysts expected $2.69 billion.
The company also maintained its guidance for the year, predicting a full-year profit from continuing operations of $1.26 to $1.36 per share on $10.7 billion to $11.2 billion in revenue. Analysts polled by FactSet expect a profit of $1.34 per share on $10.8 billion in sales.
Jefferies analyst Jason Kupferberg said that SAIC posted its second-straight quarter of growth, excluding acquisitions. That should help boost shares, he said, given the low investor expectations for the company.
The stock added 21 cents, or 1.9 percent, to $11.32 in premarket trading.
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