Posted on 10/18/2002 3:22:55 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
PLANO, Texas -- Electronic Data Systems Corp. plans to cut an undisclosed number of jobs as it seeks to reverse lagging sales, the chairman of the computer-services company warned employees.
Chairman and chief executive Richard Brown said last month that the company would cut expenses to cope with a downturn in technology spending.
On Friday, in his biweekly e-mail to the company's 140,000 employees around the world, Brown said the cost reductions would include job losses.
"Our aim is to maintain those jobs critical to client care. This undoubtedly will lead to some job loss and realignment in other areas," Brown said. "We will work to minimize the impact, but we will do what is required."
Brown did not give figures or a timetable for job cuts. EDS frequently does not discuss layoffs, although it announced in July it had cut 2,000 employees to balance its work force with available work.
Brown vowed that EDS would "come through this painful period" as a stronger company.
An EDS spokesman, Jeffrey Baum, said the company had no additional details on job losses. He repeated the company's assurance that the cuts would not affect clients.
Plano-based EDS operates computer systems for corporate and government clients. The company warned last month that third-quarter profits would fall about 80 percent short of expectations and fourth-quarter earnings would also be disappointing.
EDS blamed a downturn in discretionary spending on technology. This week, IBM Corp. said its third-quarter earnings fell 18 percent - but revenues rose at its services unit, which competes directly with EDS.
The Securities and Exchange Commission is probing events leading up to EDS' earnings warning and a series of stock transactions that the company paid $225 million to settle.
Recent large contracts, notably a $6.9 billion deal to build and maintain a communications network for the Navy and Marines, have drained cash. EDS also has failed to close an estimated $8 billion deal to provide technology services to Procter & Gamble Co., a deal that seemed imminent until EDS issued its earnings warning.
Brown told shareholders last month that EDS would cut expenses and might sell underperforming units. He warned that the market for technology services "may remain soft well into next year." He also said task forces would study the company's assets and its earnings forecasting.
In trading Friday, EDS shares fell 4 cents to $13.82 on the New York Stock Exchange. They have fallen 63 percent since the day before the earnings warning.
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