EDS' earnings affected by United Airlines bankruptcy

Electronic Data Systems Corp.'s (EDS) fourth-quarter and full-year earnings will be affected as a result of Monday's U.S. Chapter 11 bankruptcy protection filing from UAL Corp., the parent company of United Airlines.

EDS will take a write-down provision that will lower its fourth-quarter and full-year earnings per share by US$0.05, the company said Monday. Thus, the company now expects to post earnings per share of US$2.05 for its full fiscal year, down from its previous guidance of US$2.10, a spokeswoman said.

The Wall Street consensus for EDS' fourth quarter was earnings of $0.52 per share, and of $2.06 for the entire year, both prior to Monday's warning, according to Thomson Financial/First Call.

EDS will write down an investment balance of about US$40 million that it has in leveraged aircraft leases with United Airlines. Entered into in 1991, the leases had EDS own United Airlines airplanes and lease them back to the airline, which yielded investment tax credits for EDS, the EDS spokeswoman said. She described the transactions as common types of investments for tax relief purposes.

EDS, the world's second largest provider of IT services, has seen its earnings suffer this year from other high profile bankruptcies, including WorldCom Inc. and US Airways Group Inc.

Join the newsletter!

Error: Please check your email address.

More about EDS AustraliaElectronic Data SystemsFirst CallProvisionThomson FinancialUALUnited AirlinesUS AirwaysWall StreetWorldCom

Show Comments

Market Place