Even with its stock mired in a negative run, Electronic Data Systems Corp. is showing signs that its station could improve soon.
The technology services giant, which last year derived about 14% of its $14.4 billion revenues from financial services, has signed blockbuster contracts in the last 12 months worth about $19 billion, according to Karl Kierstead, analyst at Lehman Brothers, New York.
In financial services alone, EDS has struck deals worth $5.9 billion, including last week's $3.7 billion deal with Commonwealth Bank of Australia Ltd.
"It's an absolutely astounding amount of new business," said Mr. Kierstead.
The market has not treated Plano, Tex.-based EDS well recently.
On Aug. 7 the company announced pre-charge second-quarter earnings of 39 cents per share-6 cents per share below consensus estimates. EDS stock dropped about $6 on the news. Trading at around $37 midday Friday, EDS shares are off about 31% from a year earlier.
But analysts said the company's long-term prospects look better in light of the new business coming in.
For instance, the Commonwealth Bank deal would bring EDS revenues through 2006. Under terms of the proposed deal, EDS Australia would develop and run the bank's entire technology operations.
Sources said about 1,500 bank employees would shift to EDS, and Commonwealth Bank would receive a 35% stake in EDS Australia.
The Commonwealth deal gives EDS "a hallmark account" and "momentum" in financial services, said Gregory Gould, analyst at Goldman Sachs & Co., New York.
Coley Clark, senior vice president and head of global business in EDS' financial services group, declined to discuss specifics of the Commonwealth deal, which would rank among the largest bank outsourcing deals ever.
But he was enthusiastic about his company's new bookings and about EDS' future.
"We really are coming into our own as a global company," Mr. Clark said. "We've had some success in the last six months."
It is not immediately clear how the new deals would affect EDS' stock in the short term.
Investors, who have seen the company miss earnings per share estimates in both quarters this year, are wary, observers said.
Though the megadeals will certainly bolster the revenue stream, opinions are mixed on whether the business will translate into positive income.
The uncertainty springs mainly out of increased competition in the outsourcing market. Domestic markets are crowded and profit margins pinched, leading many providers to look overseas for more business.
But competition abroad also is getting fierce-particularly for the types of megadeals that EDS has struck in recent months.
Given the company's recent track record, observers said investors probably will wait to see whether EDS' deals have left room for profits.
"Investors have gotten hurt three times in four quarters," Mr. Gould said. "There is a lot of skepticism-it's even more of a show-me stock than it was before."
