Electronic Data Systems, the IT outsourcing group, on Tuesday offered further evidence that its turnround was on track when it reported a sixfold jump in quarterly profits.
Michael Jordan, chief executive, hailed the “solid” results, which were driven by a jump in new contract signings and progress in cutting the cost of providing IT services to some of its biggest clients.
“We’ve got good momentum in the marketplace,” said Mr Jordan, who announced in February that the company had completed its turnround plan and would focus on growth.
He said on Tuesday that EDS, which provides IT outsourcing to clients ranging from carmakers to the UK Ministry of Defence, had “very ambitious plans” to boost margins over the next two years.
EDS reported a net profit of $24m, or 5 cents a share, up from $4m, or a penny a share, a year earlier.
That figure included the cost of stock options expensing. Revenues were $5.1bn, up 7 per cent year on year, driven by new signings in Europe and the US.
Although earnings fell short of most estimates, revenues beat analyst expectations.
Mr Jordan said the results showed that EDS was once again a “competitive player” with IBM, the world’s biggest provider of IT services. EDS had been struggling against low morale and increased competition in IT outsourcing from Asia when Mr Jordan took the reins three years ago.
Along with winning a $3bn extension of its contract to provide IT services to the US Navy and Marine Corps, EDS also won the lion’s share of business put up for grabs when General Motors, the struggling US carmaker, awarded a new multi-year IT outsourcing contract earlier this year.
Overall, the company won $10bn in new business in the first quarter, up 45 per cent from $6.9bn one year ago.
Mr Jordan said EDS continued to make progress in its bid to move towards a lower-cost “shared services platform”, in which the one EDS application can deliver services to many different customers.
The company left its full-year forecast unchanged.