IT services provider Electronic Data Systems met Wall
Street expectations for its third quarter but is to cut 2,500 jobs,
bringing this year's announced layoffs to 5,200.
EDS closed the quarter, ending 30 September, with a net loss of
$600,000. Excluding one-time items, EDS reported net income of
$26m. Revenue rose 6% to $5.24bn.
Those results were calculated using a new accounting rule which
changes how the company recognises some revenue and which EDS
recently adopted. The result is that EDS will now recognise less
revenue and income in the early stages of contracts, and higher
revenue and income in the latter stages of contracts. EDS delayed
reporting third quarter results for a week while it sought
clarification on the accounting rule.
Comparatively, in last year's third quarter, EDS posted net
income of $86m and revenue of $5.33bn, using its previous
percentage of completion (POC)-based accounting method.
EDS announced a restructuring plan in June to cut costs, improve
the company's bottom line and dispel clouds of controversy that
have gathered over the past year, including a US Securities and
Exchange Commission investigation, sagging sales, money-losing
contracts and a devalued stock price.
At the time, EDS announced it would lay off 2,700 employees. The
plan was launched by EDS' new management team, which includes
chairman and chief executive officer Michael Jordan, who took over
from Dick Brown in March.
In October 2002, EDS announced it would lay off up to 5,520
employees.
Juan Carlos Perez writes for IDG News Service