Cash flow is increasingly a problem for EDS, the second-largest player in a market that usually requires vendors to make considerable upfront investments to secure a contract. Last week, the company said it would issue $1.7 billion in long-term debt to raise cash even as its credit rating was being downgraded to just above junk-bond status by Moody's Investors Service. Analysts have also said EDS isn't likely to realize any profit from its biggest contract--the installation of a massive intranet for the Navy and Marine Corps.
EDS did get some good news Monday, though. It says it's been awarded a five-year, $27 million contract to provide HR services to IT integration-and-procurement company World Wide Technology Inc. Under the deal, EDS will take over the hiring, managing, and paying of professional-services contractors for World Wide. Research firm Giga Information Group says that contract labor globally is a $125 billion market with more than 16,000 suppliers. In trading today, the price of EDS shares was unchanged at $21.45.