EDS ( EDS) took a $334 million pretax charge Wednesday evening to recognize a loss on a big computer outsourcing contract with the U.S. Navy.

The setback on the Navy Marine Corps Intranet deal came as the Plano, Texas, technology firm posted a delayed earnings report for the period ended March 31. Including the charge, the company posted a first-quarter loss of $126 million, or 26 cents a share, reversing the year-earlier profit of $354 million, or 72 cents a share. Excluding charges the latest-quarter EPS figure was 30 cents, a penny shy of the Wall Street consensus.

Revenue rose 2% from a year ago, reaching $5.37 billion, but fell 3% on a constant-currency basis. Free cash flow swung to $122 million from negative $184 million a year earlier.

The Navy contract, valued at its Oct. 6, 2000, signing at $6.9 billion, was trumpeted by then-CEO Dick Brown as one of the so-called megadeals that would drive EDS in an increasingly competitive marketplace for technology. But the contract has been fraught with difficulties from the start, and new chief Michael Jordan has made a priority of cleaning up the company's past messes and setting EDS back on the right foot.

"The new management team took extra time this quarter to thoroughly review our business financials. The review led to today's action on the NMCI contract and, while no one likes reporting a loss, we believe we have addressed our major exposures," Jordan said. "Now we can focus on growing our core outsourcing business in a long-term growth industry where we are one of the two global players."

The company said that since it's still reviewing its strategy and operations, it won't provide second-half guidance for now.

EDS shares have plunged sharply over the last year as the company has cut jobs in an effort to retrench. On Wednesday the stock slipped 68 cents to $17.64 ahead of the report.

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