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DXC Technology (DXC) Risk Analysis
Risk Overview Q2, 2026
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1If industry or equity research analysts have difficulty in understanding the changes to our business model, or we fail to meet our publicly announced financial guidance, our stock price and trading volume could decline.
Given the complexity of implementing our strategic priorities and the uncertain global economic conditions, we may not be able to progress on our strategic priorities in accordance with our expectations, and it is likely that our prior forecasts will prove to be incorrect. Additionally, industry and equity research analysts that publish reports about our business may not accurately capture and reflect our turnaround progress. As a result, we may fail to meet their expectations. If our financial results fail to meet our publicly announced financial guidance or market expectations, equity research analysts could downgrade our common stock or publish unfavorable research that could cause our stock price or trading volume to decline, potentially significantly.
- Debt & Financing - Risk 2We have indebtedness, which could have a material adverse effect on our business, financial condition and results of operations.
We have indebtedness totaling approximately $3.9 billion as of March 31, 2025 (including capital lease obligations). We may incur substantial additional indebtedness in the future for many reasons, including to fund acquisitions. Our existing indebtedness, together with the incurrence of additional indebtedness and the restrictive covenants contained in, or expected to be contained in the documents evidencing such indebtedness, could have significant consequences on our future operations, including: - events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could, if material and not cured, result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses;- subjecting us to the risk of increased sensitivity to interest rate increases in our outstanding variable-rate indebtedness that could cause our debt service obligations to increase significantly;- increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability for debt financing;- reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;- placing us at a competitive disadvantage compared to less leveraged competitors;- increasing our vulnerability to the impact of adverse economic and industry conditions; and - causing us to reduce or eliminate our return of cash to our stockholders, including via dividends and share repurchases. In addition, we could be unable to refinance our outstanding indebtedness on reasonable terms or at all. Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. There can be no assurance that our business will generate sufficient cash flow from operations, or that current or future borrowings will be sufficient to meet our current debt obligations and to fund other liquidity needs.
- Debt & Financing - Risk 3Our hedging program is subject to counterparty default risk.
We enter into foreign currency forward contracts and interest rate swaps with a number of counterparties. As a result, we are subject to the risk that the counterparty to one or more of these contracts defaults on its performance under the contract. During an economic downturn, the counterparty's financial condition may deteriorate rapidly and with little notice and we may be unable to take action to protect our exposure. In the event of a counterparty default, we could incur significant losses, which may harm our business and financial condition. In the event that one or more of our counterparties becomes insolvent or files for bankruptcy, our ability to eventually recover any losses suffered as a result of that counterparty's default may be limited by the liquidity of the counterparty.
- Corporate Activity and Growth - Risk 4We may not succeed in our strategic objectives, which could adversely affect our business, financial condition, results of operations and cash flows.
Our strategic priorities are focused on our customers, optimizing costs and seizing the market. We may not be able to implement our strategic priorities in accordance with our expectations for a variety of reasons, including failure to execute on our plans in a timely fashion, lack of adequate skills, ineffective management, inadequate incentives, customer resistance to new initiatives, inability to control costs or maintain competitive offerings. We also cannot be certain that executing on our strategy will generate the benefits we expect. If we fail to execute successfully on our strategic priorities, or if we pursue strategic priorities that prove to be unsuccessful, our business, financial position, results of operations and cash flows may be materially and adversely affected.
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 29
- Share Price & Shareholder Rights - Risk 1If the HPES Merger does not qualify as a reorganization under Section 368(a) of the Code, CSC's former stockholders may incur significant tax liabilities.
The completion of the HPES Merger was conditioned upon the receipt by HPE and CSC of opinions of counsel to the effect that, for U.S. federal income tax purposes, the HPES Merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code (the "HPES Merger Tax Opinions"). The parties did not seek a ruling from the IRS regarding such qualification. The HPES Merger Tax Opinions were based on then current law and relied upon various factual representations and assumptions, as well as certain undertakings made by HPE, HPES and CSC. If any of those representations or assumptions is untrue or incomplete in any material respect or any of those undertakings is not complied with, or if the facts upon which the HPES Merger Tax Opinions are based are materially different from the actual facts that existed at the time of the HPES Merger, the conclusions reached in the HPES Merger Tax Opinions could be adversely affected and the HPES Merger may not qualify for tax-free treatment. Opinions of counsel are not binding on the IRS or the courts. No assurance can be given that the IRS will not challenge the conclusions set forth in the HPES Merger Tax Opinions or that a court would not sustain such a challenge. If the HPES Merger were determined to be taxable, previous holders of CSC common stock would be considered to have made a taxable disposition of their shares to HPES, and such stockholders would generally recognize taxable gain or loss on their receipt of HPES common stock in the HPES Merger.
- Share Price & Shareholder Rights - Risk 2We could have an indemnification obligation to HPE if the stock distribution in connection with the HPES business separation (the "Distribution") were determined not to qualify for tax-free treatment, which could materially adversely affect our financial condition.
If, due to any of our representations being untrue or our covenants being breached, the Distribution was determined not to qualify for tax-free treatment under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), HPE would generally be subject to tax as if it sold the DXC common stock in a taxable transaction, which could result in a material tax liability. In addition, each HPE stockholder who received DXC common stock in the Distribution would generally be treated as receiving a taxable Distribution in an amount equal to the fair market value of the DXC common stock received by the stockholder in the Distribution. Under the tax matters agreement that we entered into with HPE in connection with the HPES Merger, we were required to indemnify HPE against taxes resulting from the Distribution or certain aspects of the HPES Merger arising as a result of an Everett Tainting Act (as defined in the Tax Matters Agreement). If we were required to indemnify HPE for taxes resulting from an Everett Tainting Act, that indemnification obligation would likely be substantial and could materially adversely affect our financial condition.
- Share Price & Shareholder Rights - Risk 3The price of our securities is subject to market and other conditions and may be volatile.
Our stock price may be volatile and subject to change based on a variety of factors, many of which are beyond our control, including changes in investment community equity analysts' earnings estimates, valuation methodologies and recommendations, our credit ratings, inflationary pressures, broader macroeconomic conditions, and the resulting impact on customer demand. We periodically provide forward-looking financial guidance regarding our expected future performance, including projections for revenue, earnings, margins and cash flow. If our actual results fail to meet our publicly announced guidance or market expectations, or if we reduce future guidance even while meeting current projections, our stock price and trading volume could be negatively impacted, potentially significantly. In addition, speculation, investor perception, and market sentiment over our results of operations, financial condition and execution of our strategic priorities, as well as announcements relating to new products or technologies, major transactions, litigation developments, or management changes involving us, our competitors, or our customers, may cause fluctuations in our stock price. A significant decline in our stock price could expose us to the risk of securities class action lawsuits, stockholder derivative lawsuits or other actions by stockholders, which may result in substantial costs and divert management's attention and resources, which may adversely affect our business. Activist shareholders may from time to time acquire stakes in our common stock and advocate for changes to our corporate governance, strategic direction, capital allocation policies, management or board composition that may not align with the interests of our long-term shareholders. Responding to proxy contests, public campaigns or other activist initiatives could be costly and time-consuming, divert the attention of our board of directors and senior management from the pursuit of our business strategies, and require us to incur significant legal, public relations and advisory expenses. Such activities could also create perceived uncertainties as to our strategic direction and may adversely affect our business, operating results, stock price as well as our ability to attract and retain qualified employees, customers and business partners. We issue debt securities from time to time, with a variety of different maturities and in different currencies. The value of our debt securities fluctuates based on many factors, including the methods employed for calculating principal and interest, the maturity of the securities, the aggregate principal amount of securities outstanding, the redemption features, the level, direction and volatility of interest rates, changes in exchange rates, exchange controls, governmental and stock exchange regulations and other factors over which we have little or no control.
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