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Cuts help EDS

Corporate coppicing lets green shoots breathe

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Job cuts have helped double profits at IT services giant EDS during a quarter of stagnant revenues.

EDS chairman and CEO Mike Jordan said dealing with "legacy overhangs" had contributed to the rise in profits.

Profit in the fourth quarter was $112m, contributing to most of what it earned in the year. Profits were down on the year by $8m to $150m. Little difference in sales was reported on either the year or the quarter. But the company signed contracts worth $1.5bn more than in the same 2004 quarter, totalling £5.3bn.

Jordan was pleased the firm retained its most important customer in a bid dubbed the "landmark GM recompete", though it had brought in 10 per cent less revenue in the last quarter than the year before.

Chief financial officer Bob Swan said he was going to "drive leverage" in 2006 as a way of bringing about even higher profits.

A UK Ministry of Defence contract brought EDS revenue increases of three per cent in the last quarter, but was won in early 2005 only after "investments" that dragged European profits down by 8 per cent.

Most of EDS' margin increases came from the US, where it drew 69 per cent more profit from government business.®

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