EDS replaces CEO in shake-up

The EDS board of directors has fired chief executive officer Richard Brown and replaced him with Michael Jordan, former CEO of CBS Corp.

In announcing the shake-up March 20, board member Roger Enrico said it was an important step to move the company forward.

Jeffrey Heller, who retired from EDS as vice chairman in 2002, will return as president and chief operating officer. Jordan too is coming out of retirement. He left CBS in 1998.

Spokesman Jeff Baum declined to elaborate on the circumstances of the change, saying Brown and the board agreed it was the right thing. The change was necessary for EDS to move ahead, "unencumbered by the past," Baum said.

EDS is the prime contract holder on the $6.9 billion Navy Marine Corps Intranet project. The rollout of the system has been fraught with difficulties, primarily because it involved a far greater number of legacy systems than the Navy had realized.

The NMCI contract could continue to hurt EDS, according to investment research firm RBC Capital Markets in a report issued today. RBC believes NMCI might not meet the goal of rolling out 300,000 seats by the end of 2003, which could cost EDS $200 million to $300 million, the report states.

Much of EDS' revenue trouble stems from its private-sector work, according to the RBC report.

The management shake-up is not expected to have any effect on the company's federal activities, said Kevin Clarke, spokesman for the company's government solutions division.

The changes come after a rough couple of years for the company, formally known as Electronic Data Systems Corp. Its stock has plummeted from a high of almost $66 to a low of $10 since late 2001, and now trades at less than $20.

"We've had some challenges," Baum said.

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