Didn't see this posted - may be duplicate - Dell Contract Story
Friday October 6 6:56 PM ET
EDS: Win of Navy Contract Is Big Boost
By Nicole Volpe
NEW YORK (Reuters) - Electronic Data Systems Corp.'s (NYSE:EDS - news) win of a record U.S. Navy computer services contract will give the world's No. 2 computer services provider a boost in the second half of next year, the company's chairman and chief executive said on Friday.
The contract, worth $6.9 billion over five years, with the option to extend it for another three years bringing the total potential value to more than $10 billion -- making it the largest federal government information technology contract ever, EDS said.
``This contract will have a modest impact on the second half of next year,'' Chairman and Chief Executive Dick Brown said in a telephone interview after the 5 o'clock announcement. ``We'll see a real impact in the year '02.''
Shares in EDS surged in after hours trade, running up to 47-1/2, according to Instinet. That was up from the close of 40-5/8 on the New York Stock Exchange (news - web sites) on Friday.
``This is going to be huge for the stock,'' said Wit SoundView analyst Gary Helmig. ``CSC was up five points on speculation they would win this. EDS going to have a nice recovery on Monday.''
EDS will create a Web-based network for the U.S. Navy and Marines, replacing the current tangle of more than 200 electronic communications gateways.
Brown acknowledged the massive planning involved for the project, saying that some 400,000 desktop computers would be needed at the outset, along with other initial investments he expects to cost in the tens of millions of dollars.
He added that the company generates enough cash that none of this initial outset would result in any kind of charge.
``Our growth is beginning to surge again,'' said Brown. ``The Navy said we had the most innovative solution. This is the largest federal IT contract ever, and we're ready to go.''
EDS won two multiyear contracts, announced in July, with Britain's Rolls-Royce Plc and Commonwealth Bank of Australia totaling $2.8 billion.
Helmig said the Navy deal was a good one for the Plano, Texas-based company.
``The Navy did say it is costing them less than they thought it would cost them,'' he said ``EDS said it has done it so it gives value to the navy and gives value to shareholders.'' |
