Long-Term Outlook Sparks EDS

In addition, the company's bookings of $2.8 billion in the quarter were more than $1 billion short of some expectations. Jordan indicated at least one major contract slipped out into August.

Still, the company's stunning 2006 earnings guidance comes less than a week after EDS surprised investors Friday with its strong second-quarter results and new guidance for 2005. The company elaborated on those results Wednesday.

EDS reported second-quarter earnings of $26 million, or 5 cents a share, and a profit before items of $45 million, or 9 cents a share, for the quarter. That compared with earnings of $270 million, or 54 cents a share, a year earlier, and a loss before items of $16 million, or 3 cents a share, a year earlier.

Thomson First Call had a consensus estimate for the second quarter of a loss of 5 cents a share when the company preannounced last week; the company's guidance called for a loss of 2 cents to 7 cents a share.

Earnings before items exclude costs of 6 cents for stock-option expensing and the issuance of performance-based restricted stock units. This measure also excludes a gain of 2 cents a share from prior-year divestitures, discontinued operations and the reversal of a portion of previously recognized restructuring expenses.

Both actual earnings and the profit before items will include an asset-impairment charge of 5 cents a share associated with a commercial contract disclosed in June. At that time, the company held assets of $166 million in support of the contract and said a significant portion or all of the assets might be impaired.

Second-quarter revenue totaled $5.2 billion, at the high end of its previous guidance. That was down from sales of $5.24 billion a year earlier. Analysts' latest model called for sales of $5.11 billion.