EDS profits fall

Sluggish sales and high costs hammered EDS' bottom line in the second quarter, and the company's near-term future doesn't look much better.

The technology services company's profits plummeted 56 percent in its second quarter, to $138 million, compared to $316 million in the same quarter a year ago. Revenues rose just 2 percent year-over-year, to $5.52 billion.

Company executives cited "continuing issues" with sales and high costs. EDS reported an operating profit margin of 5 percent in the second quarter, barely half of what it was a year earlier. The company also blamed part of its sluggish performance on a late $98 million payment from MCI. The troubled telecom provider made the payment July 7, a week after the second quarter ended. It isn't the first time MCI's travails have hurt its tech services provider; EDS in 2002 recorded a $132 million charge related to its MCI contract, although this month's payment let EDS recover much of that.

And future revenue isn't promising so far. The company signed only $3.4 billion in contracts in the second quarter, down from $6.2 billion a year ago.

In the first quarter ended March 31, EDS recorded total revenue of $5.4 billion.

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