RealTime IT News

EDS Mulls IPO of PLM Unit

EDS on Monday said it would consider selling off a minority stake of its Product Lifecycle Management (PLM) Solutions subsidiary either through an initial public offering or privately negotiated transaction as a strategic alternative to help the Plano, Tex.-based IT services giant back on its feet.

The move is part of an extensive restructuring plan announced earlier this year, less than six months after EDS fired its its chairman and chief executive Richard Brown and installed seasoned veteran Michael Jordan as the replacement.

At that time, the company said it wanted to focus on its core IT outsourcing business; invest in new growth areas like business process outsourcing (BPO) services; and strengthen its balance sheet and liquidity position. PLM Solutions was designated a complementary subsidiary business at that time.

"It's an exploration," said Sean Healy, company spokesman. "It would extract value from the unit and give PLM a little more autonomy as well as allow EDS to focus on its core business."

EDS PLM Solutions provides software to a number of industries to design and develop new products and get them out the door. With marquee customers like Ford and GM, PLM's software and related services are used by approximately 41,000 clients. In 2002, PLM Solutions generated $879 million in revenue and $138 million in operating profit.

But in addition to its own woes, EDS also has had to contend with an unrelenting recessionary business climate that shook up investors' confidence back in the fall of 2002. Even in the most recently reported quarter, the company still characterized conditions as "tepid."

"We expect this alternative would enable PLM Solutions to be more agile in the market, make decisions more quickly and more effectively leverage our roots as an independent software company on behalf of our customers," said Tony Affuso, president and CEO of EDS PLM Solutions.

EDS expects to complete any actions that arise from its review of strategic alternatives for PLM Solutions in the first half of 2004.