Electronic Data Systems (NYSE: EDS) beat analyst forecasts by two cents in the third quarter.
After market close Thursday, the IT services giant reported net income of $257.3 million, or 51 cents a share, not counting one-time events. First Call's survey of 18 analysts predicted earnings of 49 cents per share.
Including a restructuring charge of $236.3 million and a pre-tax gain of $81.5 million from the investment sales, EDS earned $158.2 million, or 31 cents per share. The charge stemmed from about early retirement packages for about 3,000 employees, severance packages for others, and asset writedowns, as EDS recently reorganized into four divisions: IT outsourcing; business process management; and two consulting units.
Third quarter revenue rose to more than $4.7 billion, a 10 percent gain year-over-year. Operating margin rose to 8.7 percent from 6.8 percent in the year-ago period. EDS signed $5.1 billion in contracts during the third quarter.
"EDS is living up to its ambitious goals -- and its potential -- with sound earnings and productivity growth," said Dick Brown chairman and CEO. "Quarter by quarter, EDS is delivering consistently improved results."
But the overhaul isn't finished yet. EDS expects more cost-cutting to lead to another charge in the fourth quarter, similar to the one taken in the first quarter, when EDS recorded a restructuring charge of $379.8 million to pay for moves that included 5,200 job cuts.
Shares of EDS rose 1 1/4 to 54 in Thursday's regular trading prior to the earnings report. Among 20 analysts surveyed by Zack's Investment Research, nine have the equivalent of "moderate buy" ratings on EDS, six recommend the stock as a "strong buy", and five have "hold" advisories.>