EDS cuts losses

Navy deal still costing it money...

By John Oates • Get more from this author

Posted in Financial News, 27th April 2004 08:23 GMT

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Services giant EDS has lost a mere $12m in the first quarter, versus a $1.4bn loss for the same period last year. It claimed losses would have been as low as $3m excluding a one-off restructuring charge and gains from a divestiture.

Sales were $5.43bn, up 4 per cent compared to the same period a year ago. EDS signed contracts worth $4bn in the three months. Sales were particularly strong for contracts worth less than $250m in financial services, government and communications.

Mike Jordan, chairman and CEO at EDS, said: "We are pleased with the progress we made in the quarter. We met our financial commitments, delivered excellent programs for our clients, finalized our leadership team and began to generate sales momentum."

EDS is still dealing with some problem contracts - its $8.8bn deal to build a intranet for the US Navy contributed losses of $145m. The company is trying to extricate itself from another contract which lost it $94m in the period. The accounts say it is still negotiating to terminate the contract.

According to Jordan, the three-fold strategy - reducing the risks associated with the Navy intranet, secondly "to achieve a negotiated settlement with our other critical-focus account" and finally gaining new business from a new sales strategy was beginning to pay off. EDS expects restructuring to deliver $1bn in cost savings this year.

EDS forecasts sales of $20bn to $21bn for the full year. ®