RealTime IT News

EDS Names New CFO, Defends Accounting

Computer services giant Electronic Data Services has named a Robert Swan, a former GE and TRW executive, as its new chief financial officer. The 42-year-old Swan is set to replace current CFO Jim Daley, who is moving to oversee EDS's client care organizations.

The executive change comes as EDS works to regain its footing and shore up its finances after running into some trouble recently with key contracts following the bankruptcy of customers US Airways and WorldCom.

Swan's appointment to CFO is effective February 10th, the company said. His title will also be executive vice president and he will report directly Chairman and CEO Dick Brown.

During remarks Tuesday afternoon at Morgan Stanley's Software, Services, Internet and Networking Conference in Arizona, Doug Frederick, executive vice president of operations solutions at EDS, said the move was nothing more than good timing. Swan became available for the position just as EDS was mulling succession candidates for Daley, who is soon to turn 62 and nearing retirement age, Frederick said.

He also suggested analysts were reading too much into the executive change on the heels of recent headlines about its third quarter results. EDS, which brings in about $21 billion annually, is on solid financial footing, Frederick said, after a recent rough patch.

In October, the Plano, Texas-based EDS announced it would trim its headcount by up to 5,600 jobs and sell off over $500 million worth of "non-strategic" assets after its net income fell by about 59 percent during the third quarter from the same time the prior year. The company said the drop was due in part to write-offs on contracts with US Airways and WorldCom.

And despite losing out to IBM recently in a major $5 billion outsourcing contract with JP Morgan Chase, EDS has snagged some big contracts of its own recently, such as a $4.5 billion deal to outsource major operations for Bank of America and a similar, $1.3 billion outsourcing contract with Dutch bank ABN Amro.

In addition, a $6.9 billion contract to build new intranet systems for divisions within the U.S. Navy that had been held up for review is expected to move forward with official word expected any day now, a company spokesman said. Analysts had been concerned that the contract hold-up was also holding up cash-flow for the company.

Prior to joining EDS, Swan was executive vice president and CFO at defense contracting company TRW for about a year. He has also held executive positions within the General Electric Company and did a stint as chief executive at failed online grocer Webvan. Swan is expected to oversee all EDS financial operations, including productivity analysis, investor relations, control and audit.

Daley, 61, has served as CFO since March 1999, the company said. In his new role he is expected to oversee areas such as sales, marketing, communications, and customer relations.

"I have always been interested in an operational role closer to the client," Daley said in a statement. "I look forward to building an organization focused on the care, support and development of valued client relationships."