EDS expects to cuts its workforce by 9 percent as part of ongoing efforts to reduce costs MIAMI – Electronic Data Systems Corp. (EDS) offered voluntary early retirement options to about 9,200, or 17 percent, of its U.S. employees, as part of its ongoing efforts to reduce costs, the company said Tuesday.EDS, in Plano, Texas, expects about half of the eligible employees to accept the early retirement offer, which would cut its U.S. workforce of about 53,000 by about 9 percent, an EDS spokeswoman said Wednesday.EDS expects that less than half of the vacated positions will have to be filled again, which will generate net savings of about US$150 million in 2005 and net annual savings of about $250 million starting in 2006. EDS Chairman and Chief Executive Officer Michael Jordan said last month the company plans to eliminate between 15,000 and 20,000 jobs over the next two years as part of an effort to slash $3 billion in costs. The EDS spokeswoman said the early retirement offer announced Tuesday is part of this plan.EDS, the world’s second largest IT services company after IBM Corp., has been struggling for over two years with a variety of problems, including disappointing sales, problematic client contracts and an ongoing investigation from the U.S. Securities and Exchange Commission launched in 2002. Jordan was hired in March 2003 to address these problems.EDS expects to take a pretax charge of about $150 million in this year’s fourth quarter as a result of the early retirement program. Retirement dates will be staggered through four quarterly stages ending on Sept. 30, 2005. EDS extended the offer to most U.S. employees who by year-end 2004 will be at least 50 years old and fully vested in the company’s retirement plan. EDS hasn’t decided whether to offer early retirement to employees outside of the U.S. yet, the spokeswoman said. EDS now has a total of about 119,000 employees worldwide.EDS reiterated its financial guidance for fiscal year 2004 of between $20 billion and $21 billion in revenue and between $0.20 and $0.30 per share in pro forma net income, which excludes a variety of one-time charges and gains.EDS was scheduled to issue its third quarter financial report on Monday but postponed it to Nov. 3 after the financial markets close in New York. EDS postponed the financial report so that it can “complete the evaluation of a possible impairment of assets” related to its $8.8 billion Navy Marine Corps Intranet (NMCI) contract. The NMCI project has been plagued by delays and mismatched expectations and has drained significant amounts of cash from EDS. “The evaluation includes a review of projected cash flow over the expected lives of the assets used on the contract as compared to the net asset position of approximately $700 million on Sept. 30,” EDS said in a statement Monday.REFERENCES: EDS may cut 20,000 jobs over the next two years, Sep. 10, 2004 Technology Industry