EDS creeps back into black

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EDS creeps back into black

Antony Savvas

Texas-based outsourcing giant EDS returned to profitability in 2004 after recording a loss in 2003 when it had to restate some of its quarterly results.

In 2004 EDS posted a profit of £88m against a loss of £944m in 2003. Sales, however, were static at £11.44bn.

The fourth quarter saw a £29m profit compared with a £187m loss for the same quarter in 2003. The return to profitability has come after EDS restructured its business and discontinued some operations.

"EDS ended 2004 a fundamentally stronger and more stable company," said chief executive officer Mike Jordan. "Our fourth-quarter results demonstrate our continued focus on improving EDS's profitability and operational execution."

Some contracts have caused particular trouble for EDS, none more so than the £4.7bn US Navy Marine Corps intranet contract, which has been restructured.

Excluding the Marine Corps contract from the fourth-quarter results would have raised EDS’s operating margin to 6.8%, compared with the 5.3% the firm actually recorded by including it in the results.

The UK’s Department of Work and Pensions is withholding millions of pounds of payments to EDS for the troubled Child Support Agency IT modernisation, which the IT services company is contesting.

EDS reported fourth-quarter contract signings including an expansion of an IT outsourcing contract with Barclays Bank to include workplace management services, and a business process outsourcing contract with the UK Ministry of Defence’s Armed Forces Personnel Administration Agency.

Total fourth-quarter sales in Europe were down 7%, partly as a result of the loss of the Inland Revenue contract to Capgemini.


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