Technology services provider EDS yesterday reported its fourth-quarter and full-year 2007 financial results, saying that GAAP net income for the quarter fell to $189 million from $217 million a year ago, on a 2% revenue increase to $5.8 billion.
EDS said that adjusted net income for the quarter, which excludes costs related to an early retirement offer, discontinued operations, and certain write-offs, rose to $295 million, or $0.55 per share, compared with $254 million, or $0.47, in the fourth quarter of 2006.
"It was a good quarter and good full year, but we're not satisfied with the pace of improvement," said Chairman and Chief Executive Ronald A. Rittenmeyer, during a conference call with financial analysts. He said improvements in margins and free cash flow will be areas of key focus in 2008.
Rittenmeyer said that EDS is "carefully monitoring" U.S. economic conditions, as concern over a recession mounts, but said that, at least for the moment, EDS hasn't felt any serious impact on its business. "We haven't seen anything that puts us in a serious state of concern," he said, noting that 48% of the company's business is outside the United States.
For the full year, EDS said total revenue grew 4% to $22.1 billion, from $21.3 billion, and strong bottom-line performances in earlier quarters helped offset the fourth-quarter drop. GAAP net income rose to $716 million, or $1.35 per share, from $470 million, or $0.89 per share, in 2006. Full-year adjusted net income was $828 million, or $1.56 per share, compared with $522 million, or $0.99 per share, a year ago.
But contract value in the fourth quarter, which EDS uses to measure its business going forward, dropped. EDS said that it signed $6.1 billion in contracts during the fourth quarter, compared with $7.6 billion in the year-ago period. Among key wins were a contract to deliver infrastructure services to Bristol-Myers Squibb and an IT services contract with Continental Airlines.
For the full year, total contract value dropped 26% to $19.5 billion. EDS said that, excluding multibillion-dollar contract renewals with General Motors and the U.S. Navy in 2006, contract value was actually up 2%. The company also noted that it signed 28 contracts worth $100 million or more in 2007, compared with 26 such deals in 2006.
Fourth-quarter results in EDS' Americas region showed that revenue slipped 8% to $2.5 billion. Operating profit in this segment dropped 28% to $394 million due to the termination of a contract by Verizon, which was previously disclosed by EDS. The company's Asia Pacific region was a bright spot, with revenue up 16% to $478 million and operating profit up 41% to $71 million. Revenue in the EMEA region grew 3% to $1.7 billion and operating profit jumped 15% to $352 million.
EDS held to its guidance for 2008, projecting that revenue will grow 2% for the year and that adjusted EPS will be $1.35.