EDS to unload "under-performing" consulting unit

EDS plans to sell off its management consulting business, AT Kearney, to a third party rather than to the unit's management, as previously planned, the company has confirmed.

Though EDS would not comment on potential buyers or a timeframe for the sale, the rumoured bidder is the consulting and investment firm Monitor Group and the deal should close in the third quarter of this year, according to press reports.

The consulting business is said to be worth around $400m to $500m.

Given that EDS is attempting to come back from poor financial performance and missed contract wins, and that Kearney's profits have been declining since 2001, the sale could make sense.

In recent months EDS' £4bn MoD outsourcing contract stands out as a major victory after being ditched from a £3bn deal with the Inland Revenue and missing out on taking part in the £6bn NHS IT programme.

Ovum analyst Phil Codling said in a research note: "The sooner we get a resolution to the AT Kearney saga, the better for EDS. The under-performing unit, which CEO Michael Jordan correctly identified as ripe for disposal when he took over in 2003, has failed to light a fire with potential buyers."

He continued: "As for the rumoured buyer, Monitor's Harvard-derived brand of global business consulting and investing make it a much more fitting home for AT Kearney than EDS."