EDS has been forced to issue a profit warning after stumbling in its attempts to turn around its operations.
The company - which last year appointed a new chief executive, Dick Brown, and embarked on a radical restructuring - announced growth for the second quarter ended 30 June will be in the "low single digits". It blamed problems with sales reorganisation, a slower-than-expected start to its new contracts and weak European currencies.
The company had expected growth in the "mid-single digits" for the quarter.
It reported profit of $240.6m (£159.2m) on turnover of $4.6bn for Q2 last year.
EDS insisted the slowdown was only temporary. "The company is confident about its ability to grow. As EDS has already stated, revenue growth will pick up and continue to improve in the second half of the year. The company remains confident that it will meet analysts' consensus expectations for the current quarter and full year 2000 earnings per share targets," it said.
However, analysts were sceptical about the company's prospects, with Morgan Stanley Dean Witter, Goldman Sachs and Merrill Lynch all downgrading EDS. "This is a major disappointment. Revenue recovery seems uncertain now," said Stephen McClellan, an analyst at Merrill Lynch.
Karl Keirstead, an analyst at Lehman Brothers, said EDS was the only major IT services company hit by the slowdown. However, AG Edwards said it expected a strong upturn in EDS's turnover thanks to large contracts signed in 1999.
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