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EDS vice chairman to retire

Still searching for a replacement for its chairman and CEO, Electronic Data Systems will now need to find a new vice chairman as well.

Still searching for a replacement for its chairman and CEO, Electronic Data Systems will now need to find a new vice chairman as well.

Gary Fernandes, 55, a 30-year veteran of the services and outsourcing company, said today he will retire at the end of the month. That leaves the Plano, Texas-based company with the challenge of finding a replacement for Fernandes, as well as a new chairman and CEO to fill the shoes of Les Alberthal, who announced in August that he will leave when a successor is found.

Included on the list of Alberthal's possible replacements, analysts say, are Ray Lane, president of Oracle; Robert Crandall, the recently retired head of American Airlines; Larry Weinbach, the head of Unisys; and Sam Palmisano, acting chief of IBM Global Services.

According to reports, EDS has approached Crandall about replacing Alberthal by the end of the year.

In a prepared statement, Fernandes noted that the service industry is growing rapidly, leaving the board to "set a new course of action" for EDS.

"I have come to believe that this is the best time for me to set a new course of action for myself," he said.

During his 30 years with the company, Fernandes established EDS's business with the U.S. federal government and got EDS's international business running by setting up the company's first operations center abroad in London. He also led the company's acquisition in 1995 of management consulting firm A. T. Kearney, and was a key player in negotiations that led to EDS's split from GM in June 1996.

Following Fernandes's departure, Alberthal and Jeff Heller, president and chief operating officer, will split his responsibilities, including global business development, sales, and marketing.

Fernandes's departure is only the latest of the company's woes. Earlier this month, EDS, the world's second-largest consulting and computer systems integration company, was downgraded by influential investment bank Salomon Smith Barney. The company has also continued to see its revenues from its largest client fall.

Fernandes's departure will lead the company to take a fourth-quarter charge of $13 million, or 2 cents per share, to cover his retirement plan, mostly for unexercised stock options.

His retirement deal includes a noncompete clause that restricts his participation in activities that would compete with EDS, along with a two-year consulting services deal with the Plano, Texas-based company.

Reuters contributed to this report.