EDS Posts Profit on Cost Cuts, As Revenue Declines by 4.7%
Electronic Data Systems Corp. posted a fourth-quarter profit on cost cutting, but the computer-services pioneer based in Plano, Texas conceded its efforts haven't increased sales and said it planned a new round of cost cutting for this year.</br></br>The second-largest computer outsourcer in the world after International Business Machines Corp. reported net income of $53 million, or 10 cents a share, compared with a net loss of $337 million, or 70 cents a share, in the year-earlier period. The return to profit stems from nearly $1 billion in cost cuts after a series of restructurings.</br></br>"We've improved our margins and gotten rid of some of the bad [contracts] that were dragging us down," said Michael H. Jordan, EDS chairman and chief executive officer. "We've made significant progress in our problem accounts" that had lower net in prior periods, he said.</br></br>Excluding a $97 million restructuring charge and other one-time items, the company would have reported earnings of $130 million, or 25 cents a share.</br></br>Revenue fell 4.7% to $5.25 billion in the quarter from $5.51 billion. New contract signings, a significant indicator of future growth, were below plan, falling to $3.8 billion from a depressed $4 billion.