EDS Shares Jump Nearly 10% on News of Record Contract

Electronic Data Systems Corp. shares rose nearly 10% as news that the company had won a record U.S. government contract lured back some investors driven off in June by a revenue scare. EDS, the world’s No. 2 computer services provider, said Friday that it had won a contract worth $6.9 billion, with a possible three-year extension worth at least $3 billion, to create and run an Internet-based computer network for the U.S. Navy and Marine Corps. Analysts had expected the contract to be awarded to El Segundo-based Computer Sciences Corp. EDS Chief Executive Dick Brown said the five-year contract also contained potential added revenue of $2.8 billion for exceeding performance goals. Brown expects the contract to add about 1% to EDS’ revenue next year and 3% to 5% in 2002. EDS shares rose $4 to close at $44.63 on the New York Stock Exchange. EDS had reported lower-than-expected revenue growth for its second quarter ended June 30, but said at the time it expected an upturn in revenue growth in its third and fourth quarters. On the NYSE, CSC shares fell $6.81 to close at $70.25, and shares of IBM Corp., which had also bid on the contract, rose $1.94 to close at $117.94.