EDS chief warns of job cuts

Trying to get it right

ComputerWire: IT Industry Intelligence

EDS boss Richard Brown told his workers last week that they will have to endure further job cuts as the services giant scrambles to get its business back on track.

The company recently warned that third quarter and fourth quarter results will not meet expectations, and that the slump in the IT industry would last into next year. The company has also been dogged by a dramatic slump in its share price.

Chairman and CEO Brown had already apologized to shareholders for the stock price slump and said the company was reviewing its operations to ensure it could generate more revenue, cash flow and earnings in the short term.

In an email to workers last week, Brown confirmed that this could mean further pain for the workforce on top of the 2,000 cuts announced this summer. "Regardless, our aim is to maintain those jobs critical to client care," the email read. But it continued, "This undoubtedly will lead to some job loss and realignment in other areas."

The company is due to report its third quarter results on October 30. No doubt tension will be high then amongst workers fearful of the chop. The company may want to placate the markets, and delivering instant cost cuts could be one way to do this.

A spokesman for the company said it was currently working through its plans for the business, and there was no timetable for when job cuts or realignments would occur. While the company was working to do things "as quickly as we can," he said, it was also "trying to get it right."

Even as he warned that jobs were on the line, Brown sought to rally workers, citing advances at different units of the company. He cited the company's Solutions Consulting business, which he said had created a "new identity, and a new market position for EDS in a matter of weeks." Similarly, he said, its AT Kearney consulting business had signed "more than $40m in boardroom engagements in the last 30 days."

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