EDS Improves in Q2 as It Looks to Cut More Staff.

IT services giant Electronic Data Systems Inc said it intends to cut more jobs as it posted second-quarter earnings that edged out Wall Street expectations on revenue that rose 10.3% to 4.62bn. The Plano, Texas-based company reported net income up 8.4% at $240.6m, or $0.48 per share. The results were boosted by a $26.5m gain from the sale of investments, without which, earnings were $0.44, when analysts surveyed by First Call were expecting $0.43. In the year-ago quarter, the company incurred a restructuring charge of $27.8m, as well as a one-time gain of $49.6m. On a pro forma basis, net income was actually up 17.7% on a year-over-year basis while EPS rose 12.8%.

For the six-month period, net income plunged 45.8% to $220m on revenue up 10% at $8.94bn, while EPS dropped 46.3% to $0.44. Six-month results include a $90m one-time gain and restructuring charges of $379.8m, stemming from the first-quarter moves that saw 5,200 jobs cut. Year-ago results include similar charges of $70.3m. The company is still trying to shed jobs and has offered an early retirement plan to about 8,000 employees, or 11% of its workforce. EDS said it expects to lay off an unspecified number of staff by the end of the year, depending in part on the uptake of the early retirement option. The company has pledged to cut roughly $1bn from its $17bn overall cost structure.

During the second quarter, EDS says it booked new contract sales of approximately $5.7bn, which it claims were the best of any second quarter in company history. New contract sales in the e-business segment represented 14% of the total. The US accounted for 75% of new contract sales in the quarter. For the first half of 1999, new contract sales totaled more than $8.6bn, also a company record.