Xerox and EDS have dropped their £2bn court battle and signed a
five-year, £1bn extension to their existing outsourcing deal.
EDS filed a lawsuit against Xerox in 1999 over the scope of the
original contract, but with new management at both companies, that
lawsuit has been dropped, said Charles Nesley, president of
information solutions for EDS in the US.
A second contract, announced on 28 November, makes Xerox the
preferred provider of document products to EDS and its customers.
In a third agreement, the two companies entered into a joint
marketing alliance that involves promoting each other's products
and services, and developing new technologies.
The contract extension covers two years with an option for three
additional years. Under the terms of the deal, EDS will continue to
run Xerox's computer and telecoms network. The deal will also
broaden some of the services provided to Xerox.
Xerox will receive £35m to provide network printers as part of
EDS's US Navy Marine Corps intranet contract. The Navy deal is part
of the agreement to make Xerox the preferred document technology
vendor for EDS clients.
The announcement comes at a time when Xerox is struggling to return
to profitability. In an announcement last week, Xerox president and
chief executive Anne Mulcahy said part of the turnaround would
require Xerox to "ensure liquidity through transferring equipment
financing to external partners".
Xerox has already sold £1.5bn in assets and cut another £700m in
costs.