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EDS Inks $108 Million Outsourcing Deal

First International Bank of Israel and EDS called the agreement the largest outsourcing contact in Israel and the first in that nation's banking industry.
Since March 2003, EDS' new management has been trying to dig out from under money-losing contracts, high costs, and an SEC investigation.

In May 2004, the company conceded that concerns about its finances caused it to lose some contracts.EDS also entered into a memorandum of understanding to consolidate securities class actions filed in late 2002, subject to certain conditions. The shareholder litigation reserve of three cents per share reflects the impact associated with this settlement.

Earlier this month, EDS posted third quarter total revenue of $4.87 billion, up three percent from $4.75 billion, which excludes sales from A.T. Kearney, in the year-ago quarter. The company earned $8 million after losing $153 million in the third quarter of last year. Recently it reported reaching an agreement to sell A.T. Kearney to a group of the firm's officers. As a result, it recognized a non-cash write-off of intangible assets in the third quarter of 19 cents per share, which is reflected in the 20 cent per share loss from discontinued operations.

But there could be trouble ahead. General Motors Corp., EDS's biggest customer, contributed $433 million in revenue, but that contract ends in 2006. GM will need to make the decision on what company gets contracts worth about $15 billion over five years.

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