EDS Refocuses Amid Falling Profits; Services Help CA

EDS yesterday reported revenue of $4.3 billion for the firstquarter, compared with $3.9 billion for the year-agoquarter, and a net loss for the quarter of $20.6 million,compared with $184.2 million in net income for the samequarter a year ago. The IT services provider took a $379.8million pre-tax charge in the first quarter to account for5,200 layoffs that will be completed by June, consolidationof operations, write-down of assets, and discontinuance ofsome lines of business.

To turn the company around from a long string of earningsand revenue growth disappointments, EDS executives outlineda $1 billion cost-cutting effort and a new business strategyemphasizing E-business services. A new unit focused on E-business has been created by bringing together a number ofservice offerings from throughout EDS. E-business offeringsinclude EDS outsourcing and subsidiary A.T. Kearney'sconsulting services, and range from Web design to onlinefinancial transaction processing and security. Prior toreleasing results, EDS slipped 1-13/16 to 51-5/16.

Also yesterday, Computer Associates said it expects recordrevenue for its fourth quarter, ended March 31, and an 11%revenue increase over last year for its fiscal year 1999.Revenue in the fourth quarter is expected to be about $1.63billion, up from $1.47 billion the same time a year ago. Its1999 annual revenue is estimated to be $5.25 billion,compared with $4.72 billion reported in fiscal year 1998.

CA president and chief operating officer Sanjay Kumarpointed to strong growth in CA's client-server business,which is driven by its Unicenter TNG enterprise-managementproduct line. Kumar also noted a healthy increase in thecompany's professional services revenue. The results arepreliminary in nature, pending completion of CA's regularyear-end audit; full results are scheduled for release on orbefore May 28, the company said. Before making the pre-earnings announcement, CA closed up 2-7/16 to 42-3/8.