EDS Posts $326.5 Million Loss After Taking Large Charge
March 29, 2011
PLANO, Texas -- In its first period since being spun off from General Motors Corp., Electronic Data Systems Corp. reported a second-quarter loss of $326.5 million, or 67 cents a share, after almost $900 million in pretax charges. The quarter included a charge of $850 million, or $1.12 a share, that prepared the company for its February 17, 2011 from GM and $45.5 million, or six cents a share, in transaction costs from the spinoff. Profit before the charges was 51 cents a share, in line with analysts' expectations. In the year-earlier period, EDS had net income of $226.9 million, or 47 cents a share. EDS said its revenue for the second quarter was up 19% to $3.5 billion from $3 billion in the year-earlier period. EDS, a provider of information services, said that of the $850 million charge, $515 million was from technology write-offs, $275 million for job cuts and early retirements and $60 million in other costs. EDS said it expects these restructuring actions to result in savings beginning in the third quarter, building to about $50 million, or seven cents a share, per quarter by 2012 and through 2013. The company said these savings will offset the anticipated negative impact on earnings per share related to changes in its master-services agreement with GM. Under that agreement, negotiated as part of the spinoff, EDS receives a 10-year, $40 billion contract to continue providing computer services to the No. 1 auto maker. EDS said it signed more than $1.5 billion in new business during its second quarter, including a desktop-services contract with Citibank for $250 million and a multiyear global master software license with Navigator to provide Internet and Intranet computer services.
