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EDS, which last month issued a shock profits warning, will reduce its workforce by 4% through layoffs and attrition.
The company refused to say whether any of the job losses would be in the UK, where the company runs the IT systems for the Inland Revenue, department of Work and Pensions and others.
EDS closed the quarter, which ended on 30 September, with net profit of $86m (£54m), or $0.18 (11.5p) per share. The company had originally expected to earn $0.74 per share.
Revenue for the quarter came in at $5.41bn, within the revised range but below original expectations of between $5.8bn and $5.9bn.
"There is no sugar-coating these results. They're the by-product of a very difficult market and of our own decisions," said Dick Brown, the company's chairman and chief executive officer.
EDS blamed the quarter's shortfall on weak sales and slow growth on existing contracts, particularly in Europe, as clients reduced discretionary spending. It also cited increased internal spending to bolster its sales teams; asset write downs related to the bankruptcy of US Airways and asset write downs in other lines of business.
In addition to the job cuts, EDS plans to cut overheads by $75m next year and to sell off non-core, non-strategic assets which should yield $500m in cash in the next 6 to 8 months.
It also plans to shift at least 1,500 positions from application development teams and client contact centres to low-cost "solutions" centres in 2003. The cost-cutting measures will not affect the quality of services, Brown insisted.
EDS signed $3bn worth of contracts, down from $6.8bn in the same quarter last year.