EDS' Profit Grows

SAN FRANCISCO -- Electronic Data Systems(EDS Quote) beat second-quarter earnings expectations Monday, but sluggishness in the U.S. was felt on the company's top line.

The Plano, Texas, services company reported revenue rose a mere 3% to $5.62 billion, from $5.45 billion in the same quarter of last year. Analysts were expecting a top line of $5.71 billion, according to Thomson Reuters.

Net income grew 16% to $160 million, or 31 cents a share, from $138 million, or 26 cents a share, in the same period of 2007.

Excluding special items, EPS was 33 cents. Analysts were looking for 26 cents.

Shares were up 10 cents to $24.79 in extended trading.

The outsourcing firm competes with technology services providers IBM(IBM Quote) and Accenture(ACN Quote).

EDS is being acquired by Hewlett-Packard(HPQ Quote) for $13.9 billion, the companies announced May 13. The deal will bring H-P more fully into competition with IBM, where the companies already vie for market share in delivering hardware and software.

The deal has been approved by regulators. Shareholders will vote on the merger July 31.

EDS issued no guidance nor held a conference call Tuesday due to the pending acquisition.

Following first-quarter trends, revenue was down 6% year over year in the Americas and up 11% in the Asia-Pacific region.

The company signed $5.4 billion in contracts during the quarter, up 27% year over year. Signings were particularly strong in Europe and the Middle East.