ICN Direct Newswire

November 2003

INTERNATIONAL CONSULTANTS' NEWS DIRECT IS SPONSORED BY:

IBM

** LATEST NEWS IN THIS WIRE **

1. EDS cuts deeper after third-quarter collapse
2. Atos Origin acquisition gets EU go-ahead
3. IBM promises 10,000 jobs worldwide
4. CGEY takes acquisition trail
5. CSC makes second-quarter advance
6. Further information - feedback/forward to a colleague/unsubscribe

Sponsor

IBM

There is a widely held perception that IBM's eServer iSeries is detached from mainstream IT, serving a closed community and offering no opportunities for consultants. This new report from UK-based analyst firm Cambashi suggests that the iSeries is in fact very much in the mainstream of IT, answering many of today's issues whilst at the same time opening up new consulting opportunities across many mid-market businesses. Click here to read more.

1. EDS CUTS DEEPER AFTER THIRD-QUARTER COLLAPSE

EDS is planning a further 2,500 job cuts after it made a third-quarter net loss of $0.6 million on revenue falling 1.8% to $5.2 billion.

The loss partly reflects the adoption of new accounting rules - which created a $1.42 billion charge against earnings in the quarter - and reverses a net profit of $86 million in last year's comparable period.

The escalation in job cuts from the 2,700 announced in June, to a total of 5,200 by the end of 2004 - 4% of EDS' global workforce - is expected to generate annual savings of $330-360 million, up $100 million on prior expectations.

EDS chairman and CEO Mike Jordan said: "We continue to implement our comprehensive transformation plan, covering all aspects of the business. As a result, we are much better positioned to compete effectively for business in our pipeline. We have also streamlined our sales process, focusing the company's resources on its most strategic contract opportunities, where we are seeing an improved win rate."

EDS signed $3.4 billion worth of contracts in the third quarter, up from $3 billion a year ago. Signings for the first nine months were $9.7 billion compared to $16.4 billion in the comparable 2002 period. EDS said the drop reflected a "narrower focus on qualified sales pursuits".

The company said revenue from its consultancy subsidiary AT Kearney dropped 26% in the quarter to $192 million, with PLM Solutions up 8% at $212 million.

IT outsourcing accounted for 56% of third-quarter revenue, applications development 20%, business process outsourcing 13% and IT consulting 3%. AT Kearney and PLM Solutions each contributed 4% of the total.

In geographic terms, revenue from the Americas fell 3% to $2.3 billion, the EMEA region rose 4% to $1.4 billion - due to higher contract signings in the financial sector - and Asia was down 10% at $246 million.

Sponsor

IBM

With the Grid@Shell project, the PSSC Grid Design Center in Montpellier designed and prototyped a Grid solution for Royal Dutch Shell. This presentation explains why Grid is relevant to Shell's business and how the Grid Design Center managed the technical challenges involved in such a project. An overview of the solution architecture and the UML based design will be presented. The presentation will conclude by explaining how similar projects can be engaged with you customer, with the support of Montpellier Grid Design Center. Forthcoming Webinar 26th November - GRID - Eric Grus, click here to register.

2. ATOS ORIGIN ACQUISITION GETS EU GO-AHEAD

Atos Origin has won approval from the European Union's Competition Authority for its $1.5 billion acquisition of SchlumbergerSema's IT services activities.

Atos Origin will now prepare detailed integration plans and a budget for 2004, ahead of an extraordinary general meeting of shareholders in early January and a closing date of mid-January.

Atos Origin chairman and chief executive Bernard Bourigeaud commented: "The acquisition of SchlumbergerSema is a major strategic move for Atos Origin that will strengthen our position in Europe and establish us as a major player in the global IT services market. Our immediate focus is on ensuring that the integration of the two businesses is carried out swiftly and effectively."

Approval for the acquisition came as Atos Origin reported a 2.4% fall in its third-quarter revenue to $845 million, and said revenues for 2003 may be "slightly lower" than in 2002. The company blamed pricing pressure on consulting and the bottom-end of the systems integration market for the problems.

Its consulting business showed a 75% revenue increase to $97 million in the third quarter, including acquired KPMG Consulting business which was consolidated for only one month in the same period in 2002. Excluding KPMG Consulting revenue, the division experienced organic decline.

Atos Origin noted an 11% fall in its systems integration business to $297 million and a 5% slide in managed operations revenues of $451 million.

Despite the revenue slippage - Atos Origin does not report profit on a quarterly basis - the company continues to forecast an operating margin of 8% for the full year, claiming it will meet the target through continuous action to minimise the cost base and improve productivity.

3. IBM PROMISES 10,000 JOBS WORLDWIDE

IBM says it will need 10,000 new staff next year, many of them in its key consultancy and services businesses.

The company is basing its expansion plan on the strength of third-quarter results showing net profit up 38% at $1.8 billion, on revenues rising 9% to $21.5 billion.

IBM Global Services turned in the biggest percentage points growth and revenue in the quarter, showing a revenue gain of 17% to $10.4 billion. The group signed more than $15 billion in services contracts in the quarter and had an estimated backlog of $115 billion in orders at the close of the period.

IBM chairman and CEO Sam Palmisano said IBM will need "approximately 10,000 new positions" next year, in the key skill areas of high-value services, middleware technologies, Linux and open standards-based hardware and software. He also said IBM will commit $200 million of its $700 million training budget to re-skill more than 100,000 existing staff.

Palmisano commented: "We are beginning to see signs that the economy has stabilised. As we look to 2004, more customers are expected to increase their investments in IT. Although it is too early to say that a rebound is at hand, we are confident that we will benefit from both a pick-up in IT spending and an economic recovery."

For the nine months to the end of September, IBM reported net profit of $4.9 billion, up from $2.6 billion a year ago, on revenues rising 10% to $63.2 billion.

4. CGEY TAKES ACQUISITION TRAIL

Cap Gemini Ernst & Young (CGEY) is bidding to buy Triaton, the IT services subsidiary of German steel and engineering company ThyssenKrupp, in an effort to increase its presence in this key European market.

CGEY confirmed it is in talks with ThyssenKrupp, but acknowledged it is not the only bidder interested in Triaton. If CGEY is successful, the Triaton group would add about 2,300 staff to its total of 2,000 in Germany and revenues of approximately $422 million.

ThyssenKrupp announced in May that it was planning to sell non-core subsidiaries in order to focus on its industrial business. Any sale of Triaton, which provides IT services to the automotive, chemicals and manufacturing sectors, is not expected to be completed before spring 2004, but could net ThyssenKrupp about $286 million.

CGEY's bid for Triaton follows its acquisition of IT professional services firm Transiciel in France. The all-share offer for the Boulogne-based company values Transiciel at $285 million and is expected to be completed by the end of 2003, subject to shareholder and regulatory approval.

CGEY intends to combine Transiciel with Sogeti, its systems integration and professional services arm, to create a company with 13,000 employees across nine countries and combined 2002 revenues of over $1.3 billion - about 15% of total group revenues.

Transiciel's latest financial results showed a net loss of $2.3 million for the first half of 2003, reversing a profit of $2.3 million in last year's comparable period. Revenue in the half fell 12.4% to $286 million for an operating margin of 4%. The company is forecasting a full-year margin of 6%.

5. CSC MAKES SECOND-QUARTER ADVANCE

CSC has turned in second-quarter profit and revenue gains, fuelled by its US federal government business and European IT infrastructure and outsourcing deals.

For the three months to 3 October, CSC reported net profit up 16% at $108.1 million - after a $5.7 million charge against its March acquisition of DynCorp - on revenues rising 32% to $3.6 billion. The results repeat its success of the first quarter.

Revenues from US federal government activities rose 97% to $1.5 billion on the strength of the DynCorp acquisition, with global commercial revenues up 6.3% at $2.1 billion. Europe led the way in the commercial arena, with revenues up 21.1% to $851.9 million as a result of new outsourcing arrangements and favourable currency exchange rate movements.

CSC's US commercial business dropped 1.9% to $932 million, with non-European international revenues down 2.3% to $288.1 million.

Chairman and CEO Van Honeycutt said: "Our results for the second quarter continue to track to our expectations. We see demand for global commercial IT services continuing to fluctuate, depending on geography and specific customer needs. The market for commercial IT infrastructure services continues to be firm, especially in Europe."

He added: "The demand for short-term commercial consulting and systems integration services continues to be mixed. Our North American short-term project activities seem to have stabilised, but softness in Europe and Asia persists. The strength of our commercial outsourcing business in Europe during the quarter more than offset the reduced discretionary spending which normally fuels demand for global consulting and systems integration activity."

Financial results for the first half show net profit up 17% at $200.4 million, on revenues rising 30.5% at $7.2 billion. CSC is forecasting third-quarter revenues of around $3.6 billion and full-year results in line with expectations.

6. FURTHER INFORMATION - FEEDBACK/FORWARD TO A COLLEAGUE/UNSUBSCRIBE

• For more information on International Consultants' News (ICN) Direct or if you have any feedback, send us an email editor@pmp.co.uk
• If you have found this newswire informative, please forward this email to a colleague
• To unsubscribe from International Consultants' News (ICN) Direct, simply send a reply to icndirect@pmp.co.uk. In the BODY of the message please type ICN DIRECT UNSUBSCRIBE
• If you would like to register for future issues: click here

Please visit http://www.pmp.co.uk to view any of these publications, all of which are fully searchable and represent thousands of pages of information relevant to the consultant community.

Publications include:

Management Consultants' News

Consultants' Advisory

International Consultants' Guide

International Consultants' News

Copyright 2008 PMP (UK) Ltd.