Big Drop-Off In Profit For EDS - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Big Drop-Off In Profit For EDS

Third-quarter profit falls 59% and new contracts are down by more than half.

EDS plans to cut 1,000 jobs by year's end and shift others overseas following a third quarter that saw profit fall 59% and new contracts tumble by more than half.

The computer-services company said Wednesday that it earned $86 million, or 18 cents per share, for the quarter ended Sept. 30. That was higher than the company's own expectation of 15 cents per share, but down drastically from the year-ago quarter, when EDS earned $212 million, or 44 cents per share.

Revenue for the quarter fell to $5.4 billion from $5.6 billion a year earlier. EDS execs blamed the drop in new contracts on a difficult market for tech services. New signings slid to $3 billion from $6.8 billion a year ago.

Earlier this month, CEO Richard Brown warned employees that the company would cut an undisclosed number of jobs to cope with a slowdown in business. Wednesday, the company said the cuts would equal 3% to 4% of the workforce, starting with 800 to 1,000 jobs by year's end. EDS also said it would shift 1,500 U.S. jobs to India, Brazil, Ireland, and the Czech Republic in another cost-saving move.

The company said it would also cut other overhead expenses by $75 million next year and sell several business units it didn't identify to raise more than $500 million.

A statement on the company's Web site says EDS's balance sheet is strong. "EDS has all the resources it needs from its operations to serve current clients and pursue new business. However, in this economic climate, we are focusing on new business opportunities, including megadeals, that generate near-term revenue, earnings, and cash flow.

The Securities and Exchange Commission is looking into events leading to EDS's earnings warning last month and a series of suspicious stock transactions.

In the first nine months, EDS earned $755 million, or $1.54 per share, on revenue of $16.2 billion--down from $958 million, or $2.04 per share, on $15.6 billion in sales in the first nine months of 2001.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Slideshows
IT Careers: 10 Industries with Job Openings Right Now
Cynthia Harvey, Freelance Journalist, InformationWeek,  5/27/2020
Commentary
How 5G Rollout May Benefit Businesses More than Consumers
Joao-Pierre S. Ruth, Senior Writer,  5/21/2020
News
IT Leadership in Education: Getting Online School Right
Jessica Davis, Senior Editor, Enterprise Apps,  5/20/2020
Register for InformationWeek Newsletters
Video
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
White Papers
Slideshows
Twitter Feed
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.
Sponsored Video
Flash Poll