In a preamble to the Plano, Texas-based company’s results chairman and CEO Dick Brown again acknowledged that the company’s missteps in the second half of last year had dented its credibility with investors.

The EDS boss also reiterated the company’s intention to improve its cash flow and profitability on new accounts and to be more selective about which major contracts it takes on. We will not be put in this position again, he declared.

Brown disclosed the appointment of David Croxville as managing director for operational risk and global costing. Croxville’s role will be to look at the financial implications of major new contracts, with their cash flow potential at the top of the list.

The services giant this week turned in revenues of $5.5bn for the quarter ending December 31, down 5.1% on the year. Net income slipped 11.1% to $360m. Discounting income from discontinued operations, earnings per share was $0.52. Wall Street had been expecting $0.48. For the full year, revenues were $21.5bn, up 1.7%, while net income was $1.1bn, down 18.1%.

However, the company struck a cautious stance looking ahead, saying it expected the market in which it competes to grow in the low to mid single digits this year.

EDS’ non-General Motors revenues for the full year are expected to show a low to mid single digit increase for the full year, while GM revenue is expected to decline in the mid-teens to low-twenties percentage range. Full year earnings per share should be $1.80 to $2.00, excluding the impact of discontinued operations. Wall Street currently expects $2.04 for the full year.

In the first quarter, EDS expects a low to mid-single digit decline in non-GM revenues, with GM business down in the high-teens to mid-twenties percentage points. First quarter earnings per share should be $0.30 to $0.35. Wall Street’s expectation was for $0.43 per share.

Full year free cash flow in 2003 should be in the range of $700m to $900m. In 2002 free cash flow was $1bn, and in 2001 was $197m.

EDS said it expected to offset the decline in EDS’s business with former parent General Motors with new business in the government and financial services markets.

CFO Jim Daley said that the company does not expect to recognize a profit on the firm’s trophy contract with the US Navy for the foreseeable future, although he does expect it to become cash flow positive on a monthly basis towards the end of this year. He added that EDS now had authorization from the Navy for 310,000 seats in total for the contract.

Source: Computerwire