EDS ( EDS) unveiled a new operating plan on Wednesday that the IT services company said is designed to cut costs, stabilize its business and strengthen its balance sheet and liquidity, but the action will require a large restructuring charge along the way.

The company said its moves will result in pretax charges and asset writedowns totaling $425 million to $475 million in 2003, equaling an after-tax impact of 58 cents to 64 cents a share, and a portion of which may be recognized in the current quarter.

As part of the plan, EDS will eliminate about 2% of its global workforce, which will help save around $230 million a year on a pretax basis.

The company will also continue to invest in its "Best Shore" initiative, locating software application development and call center support resources in cost-effective locations around the world, including Egypt, New Zealand, Canada, Brazil, Ireland, Poland and India. EDS already manages 16 of these centers around the world.

"The steps we're outlining today will make us a stronger company strategically and financially," the company said in a press release."We will decisively focus on EDS' extensive capabilities in its core outsourcing business, while addressing contract performance issues. We're also strengthening our balance sheet and improving capital flexibility through better cash utilization, stronger free cash flow, strategically accessing capital markets and pursuing sales of noncore assets."

EDS maintained its financial guidance for the current quarter of earnings between 33 cents and 38 cents a share, excluding pretax restructuring charges, asset writedowns and other items. The company is projecting revenue of $5.4 billion to $5.6 billion.

In the second half of 2003, the company expects earnings of 70 cents to 80 cents a share on revenue of about $11 billion. EDS will keep reviewing noncore, nonstrategic assets and hopes to raise about $250 million in cash from this year's dispositions. The company ended the first quarter with $1.5 billion in cash on hand. For 2004, EDS is looking for revenue of $20 billion to $21 billion.

Shares of EDS were adding $1.94, or nearly 9%, to $24.44 in recent New York Stock Exchange trading.

If you liked this article you might like

Spain to Play Netherlands for World Cup

Spain to Play Netherlands for World Cup

Wal-Mart: Analysts' Upgrades, Downgrades

Wal-Mart: Analysts' Upgrades, Downgrades

Netherlands Advances to World Cup Final

Netherlands Advances to World Cup Final

Apple: Analysts' Upgrades, Downgrades

Apple: Analysts' Upgrades, Downgrades

World Markets Mostly Lower Monday

World Markets Mostly Lower Monday