The IT services firm is taking a $2.24 billion charge against earnings, retroactive to the first quarter, because of changes in the way it recognizes revenue.
In advance of its widely anticipated third-quarter earnings report Wednesday, IT services firm EDS says it will take a $2.24 billion--or $2.92-per-share--charge against earnings retroactive to the first quarter because of changes in the way it recognizes revenue from long-term contracts. As a result of the charge, EDS's first quarter now reflects a net loss of $2.95 per share.
By adopting the accounting change, EDS is moving from a system under which it recognizes revenue based on the percentage of work completed on a contract to one under which it reports only the revenue that has actually been paid by the customer. Despite the up-front financial hit, analysts say the move is positive as it gives investors and concerned customers a more-accurate picture of the company's finances. "It raises the level of information, and that's always a good thing," says David Garrity, an American Technology Research analyst.
EDS originally was scheduled to report third-quarter earnings last week but delayed the announcement until Wednesday so its accountants could fully evaluate the impact of the accounting change.
IT's Reputation: What the Data SaysInformationWeek's IT Perception Survey seeks to quantify how IT thinks it's doing versus how the business really views IT's performance in delivering services - and, more important, powering innovation. Our results suggest IT leaders should worry less about whether they're getting enough resources and more about the relationships they have with business unit peers.
What The Business Really Thinks Of IT: 3 Hard TruthsThey say perception is reality. If so, many in-house IT departments have reason to worry. InformationWeek's IT Perception Survey seeks to quantify how IT thinks it's doing versus how the business views IT's performance in delivering services - and, more important, powering innovation. The news isn't great.
InformationWeek Must Reads Oct. 21, 2014InformationWeek's new Must Reads is a compendium of our best recent coverage of digital strategy. Learn why you should learn to embrace DevOps, how to avoid roadblocks for digital projects, what the five steps to API management are, and more.