Electronic Data Systems
Profits fell to $360 million, or $0.75 a share. Last year, EDS earned $405 million ($0.82 per share). Excluding certain one-time items, the company's income was $0.51 a share, versus $0.87 a year ago. On that basis, it topped analysts' estimates by three cents.
Revenues dropped to $5.5 billion from $5.8 billion. EDS signed contracts during the quarter worth $8.1 billion, including the 10-year, $4.5 billion deal with Bank of America
Looking ahead, the company faces a plethora of potential problems. First up is the ongoing Securities and Exchange Commission investigation into the company's $225 million purchase of forward contracts on its own stock back in September. EDS, not surprisingly, didn't comment on the investigation, except to say that it's fully cooperating.
Further, some of EDS's biggest customers are WorldCom and US Airways. 'Nuff said. Also, its big military contract with the Navy and Marine Corps isn't paying off yet. The company doesn't expect to generate cash from the multibillion-dollar deal until November or December.
Given the uncertainty of the market and its own business, EDS lowered its 2003 outlook. For the first quarter, it expects to only earn $0.30 to $0.35 a share. Analysts were looking for $0.43 a share. For all of 2002, EDS predicts its income per share will fall in the $1.80 to $2.00 range, a bit below analysts' expected $2.04. Both projections exclude the impact of discontinued operations.
Shares are up nearly 4% today on the news, but at about $16 a stub, they're still a far cry from the stock's 52-week high of $65.91.