EDS lands $2.8 billion in overseas contracts

Friday, July 7th 2000, 12:00 am
By: News On 6

Electronic Data Systems Corp. said Thursday that it has snared business worth $2.8 billion from Rolls-Royce and Commonwealth Bank of Australia.

The contract with Rolls-Royce is an extension of an existing agreement that is expected to yield incremental revenue of about $1.7 billion over 10 years. The total value of the old and new business is $2.1 billion over 12 years.

In addition to providing information technology services to the European aircraft-engine company, EDS will consult on e-business and supply-chain management issues.

John Meyer, EDS president of operations for Europe, the Middle East and Africa, said EDS is building three Web portals for Rolls-Royce – one each for employees, the company's customers and its suppliers.

Commonwealth Bank of Australia hired EDS to help manage the integration of technology and e-business services after the bank's recent merger with Colonial Limited.

Mr. Meyer said EDS advised Commonwealth on the bid and will now consult on how to capture savings from the merger. The new agreement is worth $700 million over seven years.

Analysts welcomed the news, which arrived about one month after Plano-based EDS said its revenue from new contracts for the second quarter would be slower than expected.

Mr. Meyer said the new business will add to revenue for the quarter to be reported on July 27, but he declined to quantify the amount or say whether earnings would be affected on the upside.

The agreement with Rolls-Royce is EDS' largest contract in Europe and one of the 10 largest ever for the company, said spokesman Jeff Baum.

The Commonwealth deal, which adds to an existing $3 billion contract, is the largest outsourcing agreement in the banking industry, he said.

Stephen McClellan, a longtime follower of EDS for Merrill Lynch & Co., called the contracts "a step in the right direction."

Shares of EDS were down 38 cents to $39.81.

Bloomberg News contributed to this report.