The services firm is setting up a $101 million reserve to cover payments it no longer expects to receive from bankrupt WorldCom.
EDS is setting up a $101 million reserve to cover payments it no longer expects to receive from bankrupt telco WorldCom. Despite the write-down, EDS on Wednesday still reported net income of $316 million on $5.5 billion in revenue for the quarter ended June 30, compared with $300 million in net income on revenue of $5.1 billion in the same period last year.
Both revenue and earnings were up for the services firm even though contract signings decreased from $7 billion in the second quarter of 2001 to $6.2 billion this year. But chairman and CEO Dick Brown emphasized during a conference call that contracts are being delayed, not canceled.
Revenue from General Motors Corp. decreased 15% year to year, from $775 million to $664 million, reflecting GM's continued reductions in discretionary spending, EDS CFO Jim Daley says. EDS's outsourcing business continues to be its biggest moneymaker, with $3.6 billion in revenue for the quarter. Technology consulting and systems integration revenue was $1.5 billion, while the A.T. Kearney consulting unit posted $307 million and product life-cycle management services brought in $228 million.
EDS signed WorldCom to an 11-year, $6.4 billion IT outsourcing contract in October 1999. The two companies in 1999 also signed a network services agreement, valued at $6 billion and requiring EDS to procure telecommunication network services from WorldCom over 11 years. EDS says it will provide alternate carriers for its customers as necessary.
5 Top Federal Initiatives For 2015As InformationWeek Government readers were busy firming up their fiscal year 2015 budgets, we asked them to rate more than 30 IT initiatives in terms of importance and current leadership focus. No surprise, among more than 30 options, security is No. 1. After that, things get less predictable.