Brown’s resignation as chairman and CEO of the services giant follows a disastrous year for EDS, during which it issued a series of profit warnings, saw its credit rating slashed and became the subject of a Securities and Exchange Commission investigation.

The board has drafted in former CBS Corp chairman and CEO Michael Jordan as chairman and CEO. Jeffrey Heller, who retired as vice chairman of EDS in February 2002, has been brought in as president and chief operating officer, a role he held at the firm from 1996 to 2000.

The industry will be on tenterhooks to see if the new team at the top proposes drastic action to turn the company around. Last fall EDS embarked on a restructuring program which has included job cuts and asset sales.

An EDS spokesman refused to comment on whether Heller and Jordan were contemplating any dramatic strategy changes for the firm. He also rejected suggestions the pair would be an interim management team.

They’re here to do the job at hand. I think it’s fair to say they’re going to see that through. he said. We’ve put in place a team that combines a seasoned global CEO and an executive who helped build EDS from the start.

The spokesman confirmed yesterday’s changes had been instigated by the board. He said the board had been considering options for several months, and came to the conclusion that management change was needed.

They had a conversation with Dick Brown, he said, and Dick Brown agreed a management change would serve the best interests of the company.

EDS’s troubles began in earnest last summer, when major customers WorldCom Inc and US Airways collapsed into Chapter 11 bankruptcy protection. It issued a shock profit warning last September, and warned the services market would stay soft until well into 2003.

It was then hit by concerns over its liquidity, as investors fretted over the high upfront costs of some of its mega contracts. The SEC in January formalized a probe into the events surrounding EDS’ September earnings warning, and a stock buyback program operated by the firm.

EDS announced plans to cut jobs and sell off non-core assets in October. In February, newly appointed CFO Robert Swan, said the company’s immediate priority was clearly cash, cash, cash. He also said the company would be more cautious about signing mega deals.

EDS’s board no doubt hopes the departure of Brown will restore some of its credibility in the eyes of investors, who have watched the firm’s share price slide remorselessly over the last year. Yesterday EDS’s shares closed at $15.76, compared to a 12 month high of $65.91.

Source: Computerwire