ICN Direct Newswire

February 2003

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** LATEST NEWS IN THIS WIRE **

1. Accenture buys Swiss outsourcing company
2. IBM wins $2 billion mega-deal
3. EDS profit falls 18%
4. LogicaCMG claims integration success
5. BearingPoint on the up
6. Further information - feedback/forward to a colleague/unsubscribe

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1. ACCENTURE BUYS SWISS OUTSOURCING COMPANY

Accenture has strengthened its financial outsourcing operations by agreeing to acquire key elements of Swiss IT services supplier Systor.

Accenture declined to disclose the financial terms of the deal - which covers Systor's client contracts and the majority of its 620 employees - but said it will boost its outsourcing and IT services capabilities in Switzerland.

Founded in 1970, Systor is a holding of UBS Capital, the private equity division of UBS. Among its previous owners was Perot Systems, which held a 40% stake in the company from 1995 to 2000.

Systor works predominantly in the banking and financial sectors, providing services including outsourcing, hosting, applications management and software development. In 2001, it reported sales of $312 million.

The contract requires Swiss regulatory approval before the transaction can be completed, but once this has been granted, Accenture anticipates closing the deal by the end of March.

Ralf Naef, country managing director of Accenture in Switzerland, said: "Systor's outsourcing and IT solutions capabilities are an excellent fit for Accenture and this agreement is consistent with our goal of enhancing our outsourcing capabilities in key markets around the world."

2. IBM WINS $2 BILLION MEGA-DEAL

IBM has won a $2 billion, 10-year contract from Visteon to deliver a range of IT services aimed at improving the US-based automotive supplier's competitive position.

IBM will offer services to Visteon on a global basis, including mainframe support, data centres, customer support centres, application development and maintenance, data network management and disaster recovery. Some of these services will be subcontracted, with Cap Gemini Ernst & Young the first to be selected for a $500 million, 10-year contract to provide application development and maintenance.

Visteon will maintain control of its IT strategy, architecture, planning and product development IT applications.

Describing the deal as an 'alliance partnership', Visteon president and CEO Mike Johnston said: "This agreement gives us flexibility by making our IT expenditures variable, allowing us to adjust services to meet our business demands. The partnership with IBM will enhance the quality of our IT services and improve our speed to market."

Todd Kirtley, general manager of IBM Global Services' industrial sector, commented: "Companies today need to be able to adapt their IT use in real time, responding to unpredictable market conditions. To help Visteon pursue new market opportunities, IBM Global Services is transforming its IT environment to allow the company's suppliers, customers and employees to work more effectively and productively."

Visteon has 77,000 staff and provides automotive components and systems to manufacturers from 180 sites in 25 countries.

3. EDS PROFIT FALLS 18%

IT services giant EDS has reported 2002 net profits down 18% at $1.12 billion, on turnover up 2% at $21.5 billion - and is forecasting another tough year ahead.

EDS' fourth-quarter net profit fell 11% to $360 million, on turnover down 5% at $5.5 billion.

CEO Dick Brown commented: "Market conditions in the IT services sector remained challenging in the fourth quarter as companies continued to limit discretionary spending."

No doubt referring to lost 'mega deals' at Procter & Gamble and JP Morgan Chase, as well as delays to major contracts with the US Navy and UK government, Brown added: "We completed 2002 more selective in the business we take on and more mindful of market conditions."

Prospects for 2003 also remain poor. EDS suggested a single-digit percentage increase in turnover - excluding work for former parent GM - and a mid-teens to low-twenties percentage drop in turnover from GM. In 2002, GM contributed 12% of total turnover.

Fourth-quarter contract signings were $8.1 billion, down from $10.1 billion a year ago, with full-year signings of $24.4 billion down from $31.4 billion in 2001.

4. LogicaCMG CLAIMS INTEGRATION SUCCESS

LogicaCMG says its post-merger integration process is progressing according to plan, with overall performance in line with expectations and a first tranche of 315 redundancies identified.

The company warned, however, that demand for IT services remains weak in the French and German markets, as well as in the financial services sector.

Noting a "difficult industry background", LogicaCMG said margins in its IT services business during the second half of 2002 were similar to those of the first half, despite a 7% reduction in turnover. It attributed this to the start of stabilisation in its key markets, less pronounced pricing pressure, cost management and staff attrition.

Its combined wireless telecoms business traded just ahead of breakeven in the six months to 31 December 2002, generating a combined turnover of $261 million. It is in this division that the first 315 of 1,500 planned job cuts have been identified, with the redundancies due at the company's wireless operations in Ireland.

Further rationalisation will follow in other countries in both the wireless and IT services businesses.

After one month trading as a combined entity, LogicaCMG said it is confident of achieving planned annual cost savings of $98 million, with at least half this sum being realised in calendar 2003 and the full amount being saved in 2004.

5. BEARINGPOINT ON THE UP

BearingPoint - formerly KPMG Consulting - has reported substantial gains in its second-quarter profit and turnover as a result of recent acquisitions.

Net profit in the quarter to 31 December soared 148% to $16.4 million, on turnover rising 44% to $628.9 million against last year's comparable period.

Net profit in the quarter to 31 December soared 148% to $16.4 million and turnover rose 44% to $628.9 million, on last year's comparable period.

BearingPoint chairman and CEO Rand Blazer said: "Our results show steady strength in our business and include the first full quarter's impact from our recent acquisitions and other transactions. Our goal is to continue to gain market share and enhance our profitability."

BearingPoint said that its enlargement through the purchase of several Andersen business consulting units worldwide - including Andersen's 800-strong consultancy in France - plus KPMG Consulting AG, covering the former KPMG consulting practices in Germany, Austria and Switzerland, has significantly diversified its revenue base. In the second quarter of fiscal 2003, North America contributed 66.5% of gross revenues compared to 92.2% a year earlier, with EMEA contributing 21.5%, compared to just 0.4% the year before.

BearingPoint's profit gain was in part because, unlike the previous year, it avoided any charges against job cuts. The company is anticipating a charge of between $17 million and $23 million in the third quarter as a result of 450-550 job losses in North America and Asia-Pacific.

BearingPoint noted that gross turnover in the second quarter on pre-acquisition business was flat.

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