IoT
Business & Finance
News
10/27/2003
02:13 PM
50%
50%

EDS Takes Earnings Hit From Accounting Change

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.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Register for InformationWeek Newsletters
White Papers
Current Issue
Top IT Trends to Watch in Financial Services
IT pros at banks, investment houses, insurance companies, and other financial services organizations are focused on a range of issues, from peer-to-peer lending to cybersecurity to performance, agility, and compliance. It all matters.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of July 17, 2016. We'll be talking with the InformationWeek.com editors and correspondents who brought you the top stories of the week to get the "story behind the story."
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.