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