NMCI drives EDS government revenue

EDS’ U.S. government business grew 28 percent in the integrator’s March quarter, buoyed by the recent extension of the Navy Marine Corps Intranet contract.

Government revenue rose to $840 million from $654 million in last year’s first quarter. A year ago, EDS’ government revenue declined 12 percent, with NMCI-related revenue dropping 27 percent. This year, Ron Vargo, EDS’ interim co-chief financial officer, cited NMCI as the primary driver behind the government sector’s first-quarter revenue boost.

The government business’ revenue gain was tops among EDS’ divisions for the quarter. Overall, the company posted quarterly revenue of $5.1 billion, an 8 percent increase compared with $4.7 billion a year ago. Net income was $24 million, or 5 cents per share, compared with $4 million, or 1 cent per share, in last year’s March quarter.

EDS officials pointed to the NMCI turnaround as a significant source of future cash flow. Michael Jordan, EDS’ chairman and chief executive officer, said the company expects $2.3 billion in revenue through the end of the NMCI contract.

“This was a major negative for the company and now it’s a major positive,” Jordan said of NMCI.

In March, the Navy awarded EDS a $3.1 billion extension to the NMCI contract, originally awarded in 2000. The extended contract runs through September 2010.