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EDS Posts 62% Profit Drop, But Its New Bookings Surge

THE WALL STREET JOURNAL: EDS Posts 62% Profit Drop, But Its New Bookings Surge

April 25, 2008

Electronic Data Systems Corp. said first-quarter earnings fell 62%, yet bookings jumped for the technology-services giant amid a rush of business in a down economy.

EDS appeared to benefit from a tendency of companies seeking greater efficiency in tough economic times by outsourcing some or all of their technology operations. The Plano, Texas, company said it had signed $5.6 billion in contracts in the quarter — up 66% from the same time last year — including a dozen deals of more than $100 million each. Two of the wins were billion-dollar orders from energy giant Royal Dutch Shell PLC and Singapore’s government.

“The bad economy plays to our advantage,” Ronald Rittenmeyer, chairman, president and chief executive, said in an interview.

EDS shares jumped $1.48, or 8% to $19.91 as of 4 p.m. in New York Stock Exchange composite trading.

Excluding a one-time gain of $100 million for part of a contract termination in the year-earlier quarter, net income was only slightly less than results from the period a year earlier. Both profit and revenue topped analysts’ expectations, according to a Thomson Reuters survey.

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