Following up a corporate restructuring plan announced this summer, Electronic Data Systems (EDS) Corp. is considering selling off a minority stake in the EDS PLM Solutions subsidiary as part of a larger plan to get back on its feet.
Industry veteran Michael Jordan, who was brought in last year to replace chairman and CEO Richard Brown, announced in June that EDS would focus on its core strengths, including its IT outsourcing business, and look at new opportunities in business process outsourcing. Selling off a minority stake in the PLM division, which generated $879 million in revenue in 2002 (EDS' overall 2002 revenue was $21.5 billion), is not unexpected, according to industry analysts. EDS is mulling an initial public offering or private offering expected to account for around a 20% stake in EDS PLM Solutions.
The move could be a good one for the software group. "EDS PLM Solutions was definitely buried within EDS," says Mike Burkett, research director for the PLM group at AMR Research Inc. "This strengthens their ability to compete more as a packaged software company as opposed to a service-oriented company." Burkett cautions that their performance will be more open to scrutiny as their financials will no longer be placed within EDS' accounting.