EDS' first quarter profits were hit by acquisition-related charges and high costs squeezing margins. Net profit for the first quarter was $184.2 million (#110 million) for the quarter ended 31 March, which included a $42.5 million (#25.6 million) one-off charge. This was down from $194.1 million (#117 million) for the same period last year. Gross margins were around 30%, significantly below the average of its competitors. Overall revenue increased 9.7% to $3.94 billion (#2.37 billion). The company said profits would be significantly higher in later quarters as it renegotiated a number of contracts, in particular with its largest customer and former owner General Motors. The company also said Year 2000 business continued to be strong with $26 million (#15.6 million) in additional contracts in the first quarter alone for millennium change projects.
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