Information services company EDS is to implement a business-wide restructuring after posting some disappointing first quarter results.
The company reported an 11 per cent drop in profits, despite a rise in operating revenues of 6.7 per cent, compared to the same quarter a year ago and has warned that its second quarter is also likely to be weak. The company registered operating revenues of $3.592 billion for the quarter ended March 31 1997, compared with $3.367 in the corresponding quarter last year. Net income was $194.1 million, or 40 cents a share, down from $218.8 million, or 45 cents a share, a year earlier.
Executives at the 98,000-strong company have said that they intend to slash between 7,000 and 9,000 ?non-revenue producing? jobs over the next two months in an effort to reduce costs and streamline its organisational structure.
The company remains confident that it can meet its forecasts of $2.30 to $2.35 a share for the year before a restructuring charge. But as a result of the transformation initiative the expects to take a one-time charge, possibly as early as the second quarter of 1997.
?Obviously, I am not pleased with our earnings performance in the first quarter," said Les Alberthal, EDS chairman and chief executive. ?However, we have designed an aggressive plan to improve our business, and we see reasons for optimism for the remainder of the year.
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