MCN Direct Newswire

Vol. 3 No. 36, 18 October 2004

This issue is sponsored by:

Sage, iGrafx and B2B

This issue news

1. Accenture forecasts revenue slowdown
2. Indian triumvirate put on stellar performance
3. LogicaCMG wins £8m utilities deal
4. Unisys reports dramatic drop in profits
5. Oakleigh enters MCA fold
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. ACCENTURE FORECASTS REVENUE SLOWDOWN

Accenture has recorded a strong financial performance in fiscal 2004 across all its operating groups and global regions, but is forecasting slower growth during fiscal 2005.

The company's profit for the year to 31 August climbed 39% to $692.8 million, on revenues rising 16% to $13.7 billion. Looking forward, however, Accenture forecast fiscal 2005 revenue growth of 9-12%. New bookings are also expected to slide, from $20.1 billion in 2004 to between $18 billion and $20 billion in 2005.

The stock market reacted unfavourably to the forecast, wiping 10% off the company's market value. But Accenture CEO William Green remained upbeat, saying: "We believe we are well-positioned to build on our success during the past year. We have a healthy balance sheet, a strong cash position and a positive outlook for fiscal year 2005."

Commenting on fiscal 2004, Green said: "Our growth was widespread, with net revenue increases in each of our five operating groups and across all three geographic regions. We are encouraged by the continued gains we achieved in our consulting business and by growth in our outsourcing business."

The company's consulting revenues rose 7% to $8.6 billion or 63% of the total, while outsourcing rose 35% to $5.1 billion - 37% of total. EMEA showed the fastest growth over the year, increasing 23% to $6.6 billion, ahead of Asia-Pacific rising 22% to $968 million and the Americas up 8% at $6.1 billion.

Reflecting its roots as a partnership, Accenture said it has enhanced its compensation programme for senior executives - a group of about 4,000 worldwide - so it can continue to attract and retain top talent. Accenture will award up to $170 million worth of stock options to its highest-performing senior executives in fiscal 2005.

* Last week, we reported that Accenture was among three companies beaten by Xansa to a Department of Health joint venture services contract. In fact, Accenture withdrew from the competition at an earlier stage.

2. INDIAN TRIUMVIRATE PUT ON STELLAR PERFORMANCE

India's leading IT services firms have turned in impressive second-quarter financial results, silencing any doubts about the success of offshore IT services.

Leading the trio, Tata Consultancy Services (TCS) showed net profit up 52% at £70.3 million (5.8 billion rupees), on revenue rising 44% to £294.5 million. The company added 52 clients and close to 4,000 employees during the quarter to 30 September, bringing its total employee numbers to 40,948.

Following TCS, Wipro recorded a rise of 67% in net profit to £46 million, on revenue rising 47% to £239.8 million. Wipro added 34 new clients to its global IT services and products business, which accounted for 75% of revenue, and added 5,500 employees to its 29,500-strong global workforce.

Coming in third in terms of revenue, Infosys showed second-quarter net profit up 49% at £53.3 million, on revenue rising 51% to £210.8 million. It added 32 clients during the three months and 5,000 employees for a total of 32,949.

With all three Indian giants showing strong growth, Infosys CEO Nandan Nilekani summed up the situation in commenting on Infosys' results: "Offshoring has become a mega-trend in the industry as more customers leverage their partnerships with Infosys to increase their global competitiveness. We continue to focus on scalability, which is the key to rapid growth, and on differentiation, which is the key to higher client value."

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3. LOGICACMG WINS £8m UTILITIES DEAL

LogicaCMG has clinched a £8.1 million, five-year contract with EDF Energy in the UK. It will provide consultancy, IT services and support for two areas of the utility's business - its electricity distribution network which services more than a quarter of the UK population and its back-office SAP systems.

According to EDF Energy, LogicaCMG will provide operational cost savings, experienced support of business-critical applications and help in offering high-quality customer service. IT director Andy Hooper said: "LogicaCMG's proposition meets our demanding requirements at a realistic price."

The deal is flexible to meet the changing demands of EDF Energy's electricity distribution network and includes a payment structure that allows the companyto pay for services in inflation-linked instalments in proportion to its IT spend over the five-year contract.

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4. UNISYS REPORTS DRAMATIC DROP IN PROFITS

Unisys' third-quarter net profit has been savaged by a $23.5 million pension expense, leaving the company with profits down more than 50% on last year.

Profit for the quarter to 30 September was $25.2 million (£15 million), compared to $56.2 million a year ago. Without the pension expense, Unisys' profit was $41.1 million, against $50.5 million a year ago. Revenue for the quarter was flat at $1.5 billion.

Chairman and CEO Larry Weinbach said: "After a tough second quarter, we regained our momentum and achieved financial targets for the third quarter. I was particularly encouraged by our strong double-digit order growth in the quarter, driven by a number of contract signings in outsourcing and infrastructure services. We also saw strong growth in consulting and systems integration revenue."

In line with Unisys' ambition to increase IT services sales, the company reported revenue from services up 2% in the quarter at $1.1 billion and revenue from technology down 8% at $298.6 million.

But Unisys is continuing to make cuts and reorganise in an effort to return to growth. During the third quarter it axed 1,400 employees, primarily in general and administrative areas, and reduced office space. These moves are expected to yield about $70 million in annualised cost savings by the end of 2005.

5. OAKLEIGH ENTERS MCA FOLD

Change management and technology specialist Oakleigh Consulting has joined the Management Consultancies Association, bringing with it market knowledge of central and local government, higher education and healthcare.

Oakleigh has over 70 employees in London, the West Midlands and Manchester, and has quadrupled revenues in the past three years. It has been recognised by the Sunday Times/Microsoft Tech Track 100 as one of the top 100 fastest growing unquoted companies.

In 2003/4, Oakleigh expects to show revenues of more than £10 million, with over 90% of the total being repeat business. Its customers include The Post Office, Department for Work and Pensions, the BBC, Abbey National, Barclays Bank, ICI, Shell and Next.

MCA executive director Bruce Petter said: "We are delighted to welcome Oakleigh Consulting to membership of the MCA. It brings extensive experience in UK government that complements our already growing number of public sector experts in the MCA."

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