Electronic Data Systems will spare thousands of employees the agony of watching any more of the company’s painful turnaround – by offering them early retirement.
The announcement came as the service vendor confirmed that it would meet its full year earnings guidance, and one day after it announced it was postponing the release of its third quarter results.
Under a comprehensive work force management initiative, EDS will offer 9,200 US workers voluntary early retirement. The early retirement offer will be open to most US workers who are over 50 and fully vested in the firm’s retirement plan by the end of this year, EDS said. They will leave the company in stages through September 30, 2005.
The plan will mean a pre-tax charge of $150 million in EDS’s fourth quarter results.
Around half of the eligible employers are expected to take the offer, said EDS, which expects less than half of the vacated positions will need to be refilled. This will lead to net savings of $150 million next year, and savings of $250 million a year from 2006.
Back in September, CEO Michael Jordan said the firm planned to cut 15,000 to 20,000 jobs over the next two years, as it works to cut costs by $3 billion.
Meanwhile, the vendor confirmed its full year guidance of revenue of $20 billion to $21 billion, with pro forma earnings of $0.20 to $0.30 per share.
Back in April, EDS said it expected revenue of $20 billion to $21 billion, with earnings per share of $0.20 to $0.40 cents per share. This compared to its original guidance of $0.50 to $0.60 earnings per share on revenues of $21 billion to $22 billion.
EDS narrowed its expected earnings range in July, citing uncertainties related to its ill-starred Navy Marine Corps Intranet contract.
Earlier this week the company announced it was postponing the release of its third quarter results as it continued the revaluation of assets associated with the NMCI deal. That deal has been one of the biggest drags on EDS’s effort to regain its financial health, sending a steady tide of red ink through its figures quarter after quarter.