EDS plans to pay the $144 million bill for its internal Year 2000 conversion with the fees from its external Y2K projects.
The company expects to generate $1.3 billion in revenue and $200-250 million in profit over the next three years from Year 2000 conversions for customers, it admitted to analysts yesterday. It was forced to make the statement by rising analyst concern that the date change crisis would damage EDS, because of the range of systems it operates for its large outsourcing client base.
The $144 million estimate covers EDS' own computers and those customers whose basic contracts will include the date change work. Most of EDS' 9,000 clients will have to pay extra for conversion however. However, EDS executive vice president Stuart Reeves was keen to downplay the money the company would make from corporate unpreparedness for the millennium, noting that the targeted sums are equivalent to just one typical quarter. "I don't want to paint this as a big problem or a fabulous opportunity," he told the analysts' briefing.
EDS is also planning to axe up to 10 per cent of its 9,800-strong workforce this year in the wake of a first quarter drop in profits and warnings of another one in the second quarter.
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