EDS problems reflect grim tech sector:
""Clearly this economy is going to affect us into the fourth quarter," Mr. Brown said in a conference call with investors. "I can't tell you how far it's going to go into next year."
Mr. Brown, in an interview, acknowledged that some troubles were limited to EDS. Two major customers filed for bankruptcy protection and costs were higher than expected on contracts in Europe. But he insisted that it also reflected broader market weakness.
"Something happened here, and we think the economy has really put a clamp on discretionary [information-technology] spending," said James Daley, chief financial officer.
The warning raised concerns about other information-technology companies, primarily IBM. Jay P. Stevens, an analyst with Buckingham Research Group who lowered his earnings estimate for IBM early Wednesday because of weak customer demand, said that the EDS results reinforce his concern about "the downdraft in IT spending." He said that "Europe comes up over and over again as an area with a major shortfall." Europe is an IBM stronghold. "Europe must be a very serious issue," he said. However, some of EDS's problems are unique to it, he said." |
