EDS Revenue Stalls, But It Swings To A ProfitEDS Revenue Stalls, But It Swings To A Profit

Electronic Data Systems, the nation's second biggest IT outsourcing company, said Tuesday that sales in the third quarter remained flat from a year ago, even as the company swung to a profit after taking a net loss of $153 million during the same period last year.

EDS said third quarter revenue was $4.87 billion, virtually unchanged from a year ago after excluding gains from currency fluctuations. Net income hit $8 million, or 2 cents per share.

EDS' revenue from General Motors, its largest customer, declined 7% year-over-year to $433 million. EDS's current master agreement with GM expires next year, and the automaker is in this midst of reviewing bids for follow on contracts that could total as much as $15 billion over the next five years. EDS officials have said they expect to keep at least a portion of the GM business.

Despite the lack of growth, EDS officials said they're satisfied with the company's performance in the third quarter, pointing to the return to profitability and a strong pipeline of new business. EDS signed $5.3 billion in new contracts in the period, including a $1.4 billion deal with the U.K. Department of Work and Pensions. That compares to $2.9 billion a year ago. "Their bookings are starting to look a lot better," says Cindy Shaw, an analyst at Moors & Cabot.

For the full-year 2005, EDS says it's on pace to book revenue of $19.9 billion to $20.1 billion and earn between 55 and 60 cents per share.