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EDS to cut 20,000 jobs

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CIOL Bureau
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Spencer Swartz



SAN FRANCISCO: Electronic Data Systems Corp., one of the world's biggest computer services companies, is likely to cut up to 20,000 jobs over the next two years, the company's chief executive.

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"Over the next two years, we'll see a lot of change," said Chairman and Chief Executive Michael Jordan. He said 15,000 to 20,000 people -- about 15 percent of EDS's global work force -- "will go out" on top of about 5,000 jobs cut in the past year.

Jordan said the job cuts were part of EDS's plan to eliminate about 20 percent of its cost structure, or about $3 billion. He spoke in response to a question about the company's head count at a Smith Barney technology conference in New York.

According to EDS's Web site, the company has 138,000 employees in 60 countries.



Plano, Texas-based EDS came under intense investor scrutiny in July after Moody's downgraded the company's debt to "junk" status.

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Jordan downplayed the downgrade, saying that "most of our debt doesn't come through until 2009." He said many EDS customers were not overly concerned about the downgrade.



Jordan did not update the company's financial outlook for the current third fiscal quarter.



In late July, EDS said results in the third quarter would be lower than what analysts expected, but that the fourth quarter would make up for the shortfall.

At the time, EDS affirmed its full-year outlook for a profit of about 20 cents to 30 cents a share on revenue of $20 billion to $21 billion. Current Wall Street expectations are for a profit of about 20 cents a share, excluding items, on revenue of $20.72 billion.

EDS spokesman Sean Healy said the jobs that could be eliminated were "an estimate, not a target" and might be adjusted in the future. He declined to elaborate on where the job cuts might come in the company or which geographic regions might see cuts.



Healy said EDS hoped to achieve other cost savings from productivity improvements by better-utilizing technologies and improving business processes.

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Healy said the time-frame for the $3 billion in cost-savings was 24 months to 30 months.



Beyond the Moody's downgrade, EDS has been plagued by a string of problematic contracts, with the company saying recently that it now expects to post a larger operating loss on its Navy contract.

Jordan said he was confident EDS will keep a significant portion of business from its largest customer, General Motors Corp., when that contract is up for re-bid in 2006.

"We've strengthened a lot of our offerings and I think the client (GM) is happy with what we are doing," he said, adding GM's business represented about 10 percent of EDS' total revenue.



Shares of EDS closed up 4 cents at $19.51 on the New York Stock Exchange.

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