EDS - Recent pullback a buy opportunity??? Message Board

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Technology Stocks : EDS - Recent pullback a buy opportunity???

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To: bcroyle who wrote (1203)	10/30/1998 11:44:00 AM
From: Daniel G. DeBusschere	Read Replies (1) of 1841

I suspect some sandbagging on the numbers- Since Alberthal has got his "share", and he's already sold most of his old inventory of shares, what is in it for EDS to show results that significantly exceed First Call estimates before a new CEO is chosen. This is rank speculation - however - an inducement to a tier one candidate to sign up for the top job would include a "healthy" base business with the possibility of a short term upside on the earnings that would drive share prices up AFTER the expected executive options are granted. This could be implemented with the continued conservative accounting practices which include delayed revenue and profit margin recognition on sizeable new business while the old business at GM is sucking margins. Also, no stock buy back will be possible before a new CEO is named according to Fernandes. EDS is sticking to building a strong business base. Customer satisfaction ranks very high and they are putting the investment in maintaining and improving this situation including a massive investment in GM. They are also making a strong attempt to keep key managers from getting lured away by headhunters with a proactive management retention program. Low margin business such as the PC fullfillment business is getting spun off as B Croyle mentions in an earlier post. On the positive margin side, EDS is concentrating on the $50 to $500 million contract business (50% of the $52 Billion in pipeline opportunities are in this range) which returns better margins than the mega deals. I think we are in a hold until a new CEO is named and then anyone with half a brain can start mining the cash and conservative accounting principles along with stock repurchase in order to drive up EPS.

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