EDS to hack work force as profits sag

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Computer services outfit EDS will slash into its work force by 3 to 4 percent after reporting sharply down quarterly earnings.

EDS said its third-quarter profit fell to US$86 million, or 18 cents a share, from $212 million, or 44 cents a share, a year earlier. Its revenue in the quarter fell 2.7 percent to US$5.41 billion from US$5.56 billion the year before. The company had previously expected revenue to increase between 4 percent and 6 percent in the quarter.

EDS had warned workers earlier this month that it was sharpening its axe. In mid October, CEO Richard Brown emailed staff and said: “Our aim is to maintain those jobs critical to client care.”

“This undoubtedly will lead to some job loss and realignment in other areas. We will work to minimise the impact, but we will do what is required.”

In September, Brown told shareholders that EDS may sell some of its business lines as a result of slow growth in the services market. Brown has laid of around 11,000 workers since being hired by EDS in 1999.

EDS profits have been squeezed by by losses from a long-term contract it has with bankrupt telco WorldCom.

Also, EDS' massive US$6.9 billion deal with the US Navy and Marines is running 18 months behind schedule and is siphoning off cash the company needs to compete for other big projects.

EDS has around 7,000 employees in Australia and has been in hiring mode recently, taking on 60 staff in Queensland operation on the back of a $480 million, 10-year contract with the Bank of Queensland.

A spokesperson for the local operation said the staff cut initiative was likely to have some effect here, but said it was too early for “any detail on the regional impact.”


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