IBM says problems facing EDS 'unique to EDS'

International Business Machines Corp said Electronic Data Systems Corp's problems are specific to EDS itself, a company spokeswoman said.

The spokeswoman was responding to concerns that IBM will follow EDS and warn on profits.

She said: "Based on our understanding, the problems at EDS are unique to EDS."

She would not comment any further.

Last night, EDS shocked the market, by drastically cutting its third quarter to end-September earnings outlook to a mere 12-15 cents a share from 74 cents previously on continued slump in IT spending.

The company attributed the massive shortfall in earnings to a combination of charges, ranging from sluggish spending by existing customers to a charge resulting from US Airways' bankruptcy.

On opening, EDS shares lost almost half their value and dragged IBM down with it.

At 10.20 am, EDS shares plunged $15.81, or 43.36%, to 20.65 and IBM was $4.07 or 5.85% lower at 65.48.

The DJIA was trading 107.50 points or 1.32% lower at 8,066.54.