EDS 'dissatisfied' with $400m profit

Computer services company EDS continued to build on its strong period of growth yesterday by reporting a 26 per cent increase in profits - but is still not entirely happy with its performance.

Dick Brown, CEO and president at EDS, said his company had topped off a strong year with this impressive quarter, in which the company outperformed analyst expectations.

Net income was $405m, or 82 cents a share, up from $321.4m, or 68 cents, for the same quarter last year.

Full-year profit for 2001 rose 19 per cent to $1.3bn, compared to $1.09bn in 2000.

Revenue growth rose by 13 per cent in Europe, 10 per cent in the US and 18 per cent in Asia Pacific.

Brown claimed the company had a backlog of signed business on its books that exceeded four times annual revenue. In addition, its cost cutting measures implemented in 1999 have netted $3bn in savings.

However, sales growth was down and fewer contracts were signed during the quarter than EDS expected. Brown blamed that on businesses going through cost-cutting exercises.

"Am I pleased with the quarter? Certainly. Am I satisfied? Absolutely not. Our fourth quarter signings were the third best in our history amounting to $10.1bn, but it still left us shy of another record year," he said.

EDS bagged $15.8bn of new business in the same period last year thanks to lucrative intranet contracts with the US Marines and Navy.

A T Kearney - EDS's management consulting business - also suffered a drop in revenue. The company, which accounts for five per cent of EDS's total revenue, reported a 12 per cent decline.

It also suffered a blow after its largest customer, General Motors, tightened its purse strings causing a 13 per cent dent in EDS's revenue.

Despite a slow-down in sales, Brown claimed he was not looking to lay the blame at anyone's door. "We're not looking back - we're looking in the mirror," he said.

The current sales force has been increased by around 50 per cent in an aggressive push to win new contracts. EDS is on the offensive, Brown claimed.