Electronic Data Systems Corp., aided by strong sales to financial services firms worldwide, reported record earnings and revenues for the fourth quarter of 1994.
Plano, Tex.-based EDS, a unit of General Motors Corp. with its own class of common stock, had net income of $236.5 million for the fourth quarter, up 16.6% from the same period 1993, company officials said. Earnings per share increased 16.7%, from 42 cents in the last three months of 1993 to 49 cents in the corresponding quarter last year. Fourth-quarter earnings were in line with Wall Street estimates, EDS executives said.
Revenues for the last three months of 1994 reached $2.9 billion, an increase of 25.9% from a year earlier, officials said.
For the entire 12 months of 1994, revenues topped $10 billion for the first time in the company's history, EDS executives added. "We are delighted to report another record year at EDS and to say that we expect continued strong performance in 1995," said Les Alberthal, chairman, president, and chief executive officer of EDS.
Coley Clark, director of financial institutions marketing at EDS, said business activity in his sector was "excellent" in 1994. Revenues from banks and other finance firms rose from $1.2 billion in 1993 to $1.35 billion in 1994, he said.
Two of the company's biggest contracts landed in the fourth quarter were in the financial services sector. In Italy, the INA Group, one of the country's largest insurance companies, hired EDS to provide technology services under an agreement valued at about $400 million over 10 years.
In the United States, EDS has won another 10-year deal, expected to be worth about $350 million, from American Express Bank Ltd., under which EDS will provide computer and information services for the bank's worldwide operations.
Great Western Bank, based in Beverly Hills, Calif., renewed an EDS contract to manage the $36 billion-asset institution's check processing and other back-office functions in California. EDS also inked a new agreement with Great Western to manage the bank's check processing operations in Florida.
"We were successful in all sizes of institution and across the whole service continuum from consulting to systems management," Mr. Clark said. "On the top end we did particularly well."
Stephen T. McClellan, a computer services analyst with Merrill Lynch in San Francisco, agreed with Mr. Clark's upbeat assessment, even though he said the pace of outsourcing deals with large banks has slowed somewhat since the early 1990s.
"Over the past couple of years, as institutions began feeling more confident about the future, they have spent some time scrutinizing (the outsourcing option) a little bit more," Mr. Clark said. "But I think the idea behind outsourcing is still valid, and banks are doing it for the right reasons."
He noted that one of those driving factors is banks' transition to client-server computing, whereby networks of personal computers perform the processing tasks once relegated to mainframes. An increasing number of EDS contracts with banks have a client-server systems integration component, Mr. Clark said.