EDS profits fall

EDS reported a steep drop in profit for its second quarter, which ended June 30, but investors found encouragement in the company’s outlook for the rest of the year.

The company's second quarter net income reached only $26 million, a sharp fall from the $270 million the company reported in the second quarter last year. The company's selling of a subsidiary in 2004 accounts for most of the difference, according to the company.

EDS's top-line revenues were almost the same compared to the year-ago quarter. It reported $5.2 billion for the quarter this year, and $5.24 billion last year.

Michael Jordan, EDS's chairman and chief executive officer, said the rest of 2005 looks promising for the company. The company projects revenue of $20 billion to $21 billion for the full year.

“We think '05 is really gaining momentum,” Jordan said in the company’s earnings teleconference.

Even the troubled Navy Marine Corps Intranet project is showing improvement. Revenue from that project increased to $219 million, which the company termed a significant increase over last year. The contract had an operating loss of $10 million in this year's second quarter, compared with an operating loss of $171 million for the year-ago quarter.