EDS suffers US Navy broadside

Delays earnings announcement pending damage assessment

By John Oates • Get more from this author

Posted in Financial News, 26th October 2004 14:56 GMT

Free whitepaper – Dell PowerEdge servers 2009 - Memory

Services behemoth EDS has delayed posting its accounts until 3 November while it tries to work out how much damage it suffered from its disasterous US Navy project.

The $8bn deal has already forced EDS into making a profit warning. The firm's accountants KPMG are working out the value of $700m of assets connected to the project. EDS shares fell five per cent in after-hours trading from just over $20 to $19, according to Reuters.

A statement on the firm's website says earnings for the quarter ended September 30 2004 will not be ready until 3 November. But EDS expects earnings to be in line with expectations of five to ten per cent per share. Including the impact of US Airways going bust, but excluding the impact of the Navy contract, EDS expects revenue of between $4.9bn and $5bn for the quarter.

The Navy Marine Corps Intranet(NMCI) has been a nightmare for EDS almost since the start. The contract has already cost the firm more than $500m in related write-off costs and led to an investigation by the Securities and Exchange Commission.

Full release available on EDS's website here. ®