NEW YORK – Electronic Data Systems Corp. (EDS), the world's No.2 technology services provider, Monday swung to a quarterly profit after turning around some unprofitable contracts, but guided down 2005 earnings estimates due to the loss of a big UK contract last year.
First-quarter net profit was $4 million, or 1 cent a share, including option costs, compared with a year-ago net loss of $12 million, or 2 cents a share. Last year's loss would have been 9 cents a share if options were expensed.
Total revenue fell 5 percent to $4.94 billion. Revenue from its largest commercial client General Motors Corp. (GM) decreased 8 percent to $465 million.
Profit, excluding option expenses and restructuring costs, was 7 cents a share, exceeding analysts' average forecast of 3 cents a share, according to Reuters Estimates.
Contract signings surged 87 percent to $7.1 billion, boosted by a $3.85 billion contract with Britain's Ministry of Defence.
Free cash flow in the quarter was an outflow of $82 million versus an outflow of $166 million last year.
EDS expects second-quarter revenue of $5.0 billion to $5.2 billion and a loss of 2 cents to 7 cents per share. Wall Street analysts on average expected earnings of 10 cents a share and revenue of $5.06 billion.
For 2005, it sees revenue of $20 billion to $21 billion, earnings of 40 cents to 50 cents, and free cash flow of $500 to $700 million. Analysts have expected a profit of 54 cents a share on revenue of $20.19 billion.
The lower guidance reflects EDS' loss last year of a $5 billion contract with Britain's Inland Revenue tax authority.