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EDS Cuts 2,000 Workers to Match Contracts

Tech: The company says the layoffs are not related to its work for WorldCom. The firm's stock continues to slide.

July 03, 2002|From Associated Press

Electronic Data Systems Corp. said Tuesday that it has laid off 2,000 workers, or 1.4% of its work force, saying the cuts were needed to balance its employment levels with ongoing contracts.

EDS, which has 140,000 employees worldwide, said most of the cuts were in North America. It said it periodically hires or fires workers to match them with available work.

The computer services company denied that the cuts were related to its work for troubled telecommunications company WorldCom Inc.

EDS has an 11-year contract with WorldCom signed in 1999.

The layoffs were announced as EDS moved to stop a slide in its stock that has erased about $9 billion of shareholder value in the last week.

EDS Chairman and Chief Executive Richard Brown defended the company's accounting practices and said that even if WorldCom went out of business, the effect on EDS would be minimal.

Investors apparently were not soothed. After taking EDS' stock down 36% in the last week, the shares lost an additional 33 cents, or 1.1%, to $30.12 on the New York Stock Exchange.

Plano, Texas-based EDS earned about $600 million from the WorldCom contract last year, or about 2.5% of its revenue.

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