EDS signs $4.5 billion in new contracts

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E-business and information technology provider EDS reported this year’s Q1 earnings at $0.47 per share up 31 per cent over 1999. Revenues of $4.5 billion, up five per cent on $4.3 billion for last year. Base, or non-GM, revenues increased 10 percent on a constant currency basis.

Contract signings were $4.5 billion, the fifth straight quarter of record signings, and 50 percent higher than the same quarter a year ago.

“Our e-solutions business, with approximately $500 million in contract signings, continues to lead the way into an expanding e-business marketplace, the cornerstone of our future position,” said Dick Brown, EDS CEO.

“Our operating margin increased 200 basis points to 8.3 per cent from the prior year, demonstrating continued and sustained gains in productivity. The productivity of our reorganized and expanding sales force increased 64 percent,” Brown said.

During the first quarter EDS also recognized a net pre-tax gain of $97.6 million ($0.13 per share) resulting from the sale of e-business investments. Including this gain, net income was $288.9 million and diluted earnings per share were $0.60.

“This gain represents the first positive financial impact from our decision to play a more active role in the e-business market,” said Jim Daley, chief financial officer. “Harvesting this gain provides an economic offset against the net expense of $0.04 per share, included in our reported results of $0.47, related to the start-up operations of CoNext.”

In last year’s first quarter, the company recorded certain pretax charges, net of investment gains, totaling $316.3 million. Excluding these items, net income was $181.8 million, and earnings per share were $0.36. Including these items, the company recorded a net loss of $20.6 million and loss per share of $0.04 in last year’s first quarter.

Revenue growth by line of business includes 35 percent in e-solutions and 13 percent in A.T. Kearney with base revenue growth of 10 percent in Information Solutions and 5 percent in Business Process Management.

Contract signings, totaling a record 847 in the first quarter, showed broad-based strengths across lines of business, industry and geographic sectors. Particularly notable was the company’s e-solutions group, which signed more than 300 contracts in the first quarter. Geographically, the total contract value of EDS’ U.S. signings grew 110 percent over last year’s first quarter. Further, EDS’ communications, financial services, government, and products and retail industry groups more than doubled the value of their signings over the comparable quarter.

EDS’ new business-to-business subsidiary, CoNext, is rapidly strengthening. CoNext most recently signed Boise Cascade as the primary office supplies provider for its newly formed procurement netmarkets. Under this agreement, clients are saving 25 percent or more over traditional procurement methods, further validating the service impact and market opportunity for CoNext. Additionally, CoNext’s targeted expansion into both the Canadian and European markets continues.

During the quarter, EDS enhanced its alliance agreement with Sun Microsystems with plans to open three joint “dot-com” competency centers to assist clients as they expand their Web presence.  


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