IT services provider Electronic Data Systems (EDS) has reported a steep loss in its fourth quarter, ending 31 December 2003, blaming its US Navy/Marine Corps Intranet (NMCI) contract.
EDS posted a net loss of $354m after writing down $559m in deferred costs related to the NMCI contract.
EDS won the NMCI contract in October 2000, which was valued at $6.9bn at the time of signing, but it has been plagued by delays and controversies over its scope.
EDS said it is working with the Department of the Navy to "stabilise" the NMCI programme by developing a more predictable and controlled base-by-base roll-out schedule. The revised plan required the $559m write-down in the fourth quarter.
Excluding those one-time items, net income came in at $59m compared with net income of $194m in the fourth quarter of 2002.
Revenue rose 8% to $5.76bn, helped by growth in IT outsourcing services.
Other NMCI adjustments included a reorganised account team which now reports directly to EDS president and chief operating officer Jeff Heller and improved co-ordination with the Navy. Both EDS and the Navy remain committed to NMCI.
For the full year, EDS posted a net loss of $1.7bn compared with net income of $460m in 2002. Revenue rose 7% to $21.5bn.
EDS expected 2004 full-year revenue to be in the $21bn to $22bn range. For the first quarter of 2004, revenue is expected between $5bn and $5.2bn, including NMCI.
The value of contracts signed fell in the fourth quarter to $4.3bn, from $8.1bn in the fourth quarter of 2002. For the full year, they fell to $14bn from $24.4bn.
Juan Carlos Perez writes for IDG News Service