- The Washington Times - Tuesday, July 3, 2007

Tight margins and an unfavorable market have forced CACI International Inc. to lower the bar and focus on the future.

CACI is an Arlington firm that provides information-technology services to the federal government.

Last week, CACI surprised Wall Street by releasing a 2008 fiscal outlook that fell short of what many analysts had forecast.

The company said that it expects 2008 earnings to fall between $76.5 million ($2.50 per diluted share) and $85.7 million ($2.80 per share).

“You could drive a truck through that guidance range,” said Alex Hamilton, an analyst at the Benchmark Company LLC, a New York financial-services firm. “They are having a hard time anticipating the funding environment,” he said.

Since the “war on terror” began in 2003, discretionary funds that would have normally been allocated to federal programs, such as information technology, have been allocated to support the war efforts in Iraq and Afghanistan.

As a result, federal spending in the information-technology sector has been tight and has created a difficult market for companies like CACI.

“In the past couple of years, CACI has set the bar too high,” said Jason Kupferberg, an analyst at UBS, a financial-services firm based in Zurich.

“This is a more prudent approach, to set the bar at levels that are more achievable,” he said.

Paul Cofoni, who stepped into his new role as CACI’s new president and chief executive officer yesterday, couldn’t agree more.

“I feel that our [outlook] numbers [for the fiscal year 2008] were very realistic numbers, given the environment we are currently in,” said Mr. Cofoni.

Formerly the head of U.S. operations, Mr. Cofoni replaces former CEO Jack London, who became executive chairman of the board at CACI.

“I feel badly that we gave [some analysts] a surprise, but we were puzzled as to why [their expectations] were so high,” said Mr. Cofoni.

Shares of CACI slipped yesterday to $48.83, down 2 cents from Friday.

Net income for the first quarter ended March 31 fell 8 percent to $57.7 million ($1.84 per diluted share) compared with $62.8 million ($2.02) the previous year.

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