Dick Brown ousted from EDS

21 March 2003 Dick Brown has been ousted as CEO of services giant EDS after a series of profit warnings, disappointing sales figures and an investigation by the Securities and Exchange Commission (SEC) into the company’s accounting practices.

The move follows a year in which the company’s earnings were hit by the collapse into Chapter 11 bankruptcy protection of major outsourcing clients WorldCom and US Airways. Brown was accused in some quarters of being over-aggressive in trying to win outsourcing business and leaving EDS financially exposed if the contracts turned sour.

In 2002, the company reported revenues of $21.5 billion, up only marginally compared to 2001, and net income down 18% to $1.11 billion. As a result, EDS shares slumped by three-quarters in the last year and Brown lost credibility among investors who had been expecting a better financial performance.

“The board came to a consensus that it was time for a change in leadership and management. The business is solid. We think a new leadership team will give us an opportunity to have a fresh start,” EDS director Roger Enrico told the Wall Street Journal.

Brown had been the first outsider to be appointed CEO of EDS when he took the helm of the services giant in January 1999. Previously, he had been CEO of telecoms operator Cable &Wireless

Brown was widely credited with turning the company around after a lacklustre period in the technology spending boom of the mid-1990s – a time when many of its rivals, particularly IBM Global Services and Accenture, then known as Andersen Consulting, were growing fast.

Upon arrival at EDS, he cut 5,200 jobs, including seven senior executives and a fifth of the company’s sales force, in a bid to shake up the “old and flabby” company and to slash annual costs by $1 billion.

Brown has been replaced by Michael Jordan, a retired former chairman and CEO of US media company CBS. Jordan was responsible for breaking up electrical conglomerate Westinghouse — of which CBS was a part — when he was appointed CEO in 1993.

EDS has also appointed Jeff Heller as chief operating officer. He is also coming out of retirement, having left EDS in February 2002 after 34 years at the company.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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