EDS Beats By a Penny, But Weak Guidance Sends Shares Lower


EDS reported 2Q net income increased 33% to $138 million, or $0.26/share, with adjusted EPS of $0.27 topping analysts' average estimate by $0.01. Sales rose 5% to $5.45b, slightly exceeding expectations. However, EPS guidance of $0.37 - $0.43 for 3Q disappointed the Street, which had projected $0.43 on average. New contract signings also came up short of expectations, with year-to-date through 2Q bookings less than half of its full-year target of $23b. President Ron Rittenmeyer explained three large deals totaling more than $4.3b slipped into 3Q. (See earnings call transcript). Revenue guidance of $5.6b - $5.8b for 3Q was ahead of the Street consensus of $5.6b. For the year, EDS still forecasts EPS of $1.55 - $1.60, on sales of $22b - $22.5b, compared to analyst estimates of $1.57 on sales of $22.2b. Shares of EDS lost 2.7% to $26.27 during normal trading and fell as much as 6.1% to $25.34 after its earnings statement was prematurely released at 3:22 p.m. EDS lost 2.9% to $25.50 in very thin after-hours trading. EDS-EarningsChart-8-2-2007

Sources: Press release, Bloomberg, MarketWatch, TheStreet.com
Commentary: S&P 500 Stocks With Largest Trailing 12-Month P/E Contractions/ExpansionsIT Giants Team Up To Save $5.5 Billion In Energy CostsRecent Earnings Strength Tied to International Exposure
Stocks/ETFs to watch: EDS. Competitors: ACN, IBM, ACS, CSC, PER. ETFs: PWP

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