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August 1, 2006
PLANO, Tex., — The Electronic Data Systems Corporation, which runs other companies’ computers, said Tuesday that its second-quarter profit rose fourfold and contract signings, an indicator of future revenue, doubled.
But the company issued a third-quarter earnings forecast that was below analysts’ expectations and said it would cut 3,000 to 4,000 jobs in the second half of the year while hiring more people in India and China.
The company said it earned $104 million or 20 cents a share in the quarter, in contrast to $26 million or 5 cents a share a year earlier. E.D.S. said it would have earned $107 million in the recent quarter excluding losses from discontinued operations and a one-time gain.
Analysts were expecting 16 cents a share, according to a survey by Thomson Financial.
Revenue was $5.19 billion, up from $5.00 billion in the period a year ago. Analysts expected $5.14 billion.
E.D.S. signed $5.4 billion in contracts in the second quarter, up from $2.6 billion a year ago, including a seven-year, $1.7 billion contract with Kraft Foods and a six-year, $700 million contract with Bank of America.
E.D.S. said it had more than $15 billion in signings in the first half of the year, its best pace since 2001.
The shift in work, plus automation, will lead to 3,000 to 4,000 job cuts in the second half, up from a cut of 1,000 in the first six months. The company had nearly 120,000 employees on June 30.
Mr. Jordan and other executives said job-trimming would become a standard practice, partly because EDS is trying to shift from the highly competitive and lower-margin business of running computer systems into faster-growing areas, such as managing back-office operations for other companies.
While cutting jobs in Europe and the United States, E.D.S. executives said they planned to add up to 5,000 jobs in India and nearly 1,000 in China this year.
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