EDS posts $1.7 billion loss for 2003
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EDS has reported large losses in 2003 and revealed that it is pulling out of its last bid for a share of the multi-billion pound NHS IT modernisation contracts.
6 February 2004 Troubled services giant EDS has reported large losses in its fourth quarter, shortly after pulling out of its last bid for a share of the multi-billion pound IT modernisation contracts for the UK's National Health Service.
EDS, the world's second largest IT services company, posted a net loss of $354 million — a reversal of its results posted in the same period last year, when it reported net income of $360 million.
The main cause of the loss was a problematic contract with the US Navy. EDS wrote down $559 million in deferred costs relating to the Navy Marine Corps Intranet (NMCI) programme. Excluding NMCI, EDS's fourth quarter net income stood at $59 million.
EDS CEO Michael Jordan insisted that excluding NMCI, fourth quarter results "met expectations" and that efforts were continuing to "put EDS's house in order". But new contract signings plunged in value during 2003 — an ominous indicator of future revenues.
During 2003, the company signed contracts worth $14 billion in new business, compared to $24.4 billion in 2002. Full year results were little more encouraging for the struggling services giant, with net losses weighing in at $1.7 billion, down from net income of $1.12 billion achieved in 2002.
Its decision to pull out of the bidding for the NHS broadband link contract is just the latest in a string of setbacks for EDS and comes just over a month after failing to have its £3 billion (€4.4 billion) Inland Revenue contract renewed.
The broadband bid was EDS's final attempt to win a share of the £5.5 billion available in the current round of NHS IT contracts.
NHS IT chief Richard Granger recently added voice transmission to the contract requirements and it is thought EDS pulled out because it lacked the telecoms skills required to add this requirement to the original data transmission specification.
Nevertheless, Jordan expressed optimism for a revival in the IT services market in the second half of the year. "We now have the resources, leadership and sales capabilities in place to re-establish EDS in the market. Our 2004 focus is squarely on growing the business," said Jordan.
