MCN Direct Newswire

Vol. 3 No. 3, 19 January 2004

This issue is sponsored by:

Teleware and Data-Re Limited

This issue news

1. IBM heads into 2004 with "good momentum"
2. EDS buys Feld IT consultancy
3. Accenture feels squeeze in first quarter
4. Fujitsu reorganises in Europe
5. Getronics restructure pays off
6. Further information - feedback/forward to a colleague/unsubscribe

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1. IBM HEADS INTO 2004 WITH "GOOD MOMENTUM"

IBM claims that it is starting 2004 with "good momentum" after turning in fourth-quarter and full-year financial gains.

Fourth-quarter net profit reached $2.7 billion, up from $1 billion a year ago when the company took a charge of $1 billion. Revenues in the three months to 31 December rose 9% to $25.9 billion, with gross margin in line with last year's figure at 37%.

IBM's Global Services division - which includes its consultancy and IT services operations - performed well in the quarter with revenues including maintenance rising 8% to $11.4 billion. But the division fell behind hardware, software and personal systems in terms of percentage growth.

IBM signed $17.3 billion worth of services contracts in the quarter and closed 2003 with an estimated services backlog of $120 billion.

Every IBM region grew revenue in the fourth quarter, with Europe, the Middle East and Africa up 17% to $9.1 billion, the Americas up 4% to $10.6 billion and Asia-Pacific up 13% to $5.4 billion.

IBM's full-year 2003 net profit more than doubled to $7.6 billion, on revenue rising 10% to $89.1 billion - including a full-year contribution from PwC Consulting which was acquired in October 2002.

Revenues from Global Services rose 17% to $42.6 billion, ahead of hardware revenues up 3% to $28.2 billion and software revenues up 9% to $14.3 billion.

IBM chairman and CEO Sam Palmisano commented: "This was a very good quarter for IBM and an encouraging end to a year in which we steadily gained momentum and posted record revenues. We enter 2004 with good momentum. The client buying environment is steadily improving. We are enthusiastic about our prospects for this year and beyond."

2. EDS BUYS FELD IT CONSULTANCY

EDS has acquired Dallas-based Feld Group and with it two senior executives who will top-out its management team.

EDS paid $41 million in cash for the privately held technology management firm, as well as $48 million worth of restricted stock, warrants and options for Feld employees to acquire EDS stock.

Following the acquisition, Charlie Feld - founder of Feld and named by CIO Magazine as "one of the 12 most influential IT executives of the past decade" - has been appointed head of EDS' service offerings and solutions. Steve Schuckenbrock, chief operating officer of Feld's consulting business, has become EDS executive vice president of global sales and client solutions.

They are running two of the three core operations created by EDS chairman and CEO Mike Jordan. Former ChevronTexaco chief information officer Dave Clementz was recently appointed to lead the third key area, service delivery.

Feld's 60 staff will move to EDS which will also use Feld's IT and business process implementation software.

Jordan said: "We believe the addition of the Feld Group speeds our transition to an increasingly more cost-competitive high-value model, bringing world-class talent, consulting relationships and innovative IT management software, processes and methodologies. It also extends the Feld Group's range of transformation services to our clients and prospects around the world."

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3. ACCENTURE FEELS SQUEEZE IN FIRST QUARTER

Accenture increased its net profit by 37% in the quarter to November 2003, on revenues rising 11% to $3.3 billion. But the company's gross margins were squeezed from 39.4% a year ago to 34.1%.

Accenture attributed the squeeze to a continuing shift in its business mix towards outsourcing which has lower gross margins than consultancy, continued price pressure, and poor margins on three rogue contracts in its communications and high-tech operating group.

Consulting revenues in the quarter were down 1% to $2.1 billion, representing 64% of net revenues, with outsourcing up 45% to $1.2 billion, or 36% of net revenues.

Accenture's Europe, Middle East and Africa region made a 16% gain in revenues to $1.6 billion, with the Americas up 7% to $1.5 billion and Asia-Pacific up 6% to $220 million.

Accenture chairman and CEO Joe Forehand said: "We are seeing good business opportunities and are pleased with our strong new bookings. New bookings for the first quarter were $5.1 billion, our third highest quarter ever, with outsourcing new bookings at $3 billion and consulting new bookings at $2.1 billion.

"Our priority for the balance of the year will be to stay focused on execution. With utilisation improving and growth in our billable workforce, we can be more selective about the opportunities we pursue and how we price our services. We will continue to focus on executing the three growth platforms of our business strategy: scaling business consulting, extending our leadership in systems integration and technology, and accelerating our efforts in business process outsourcing."

Looking forward, Accenture expects second-quarter net revenues in the range of $3.1-$3.3 billion and full-year 2004 revenue growth of 8-12%.

4. FUJITSU REORGANISES IN EUROPE

Fujitsu is consolidating its European IT services and consultancy businesses, bringing Fujitsu Consulting (formerly DMR) and Fujitsu Technology Solutions International (ex-Amdahl data centre support services) back into the former ICL business, Fujitsu Services.

The rationale behind the move is to face the European market as a single, end-to-end IT services firm with an integrated design, build and run operation using skills from across the enlarged group.

The reorganisation under the Fujitsu Services name is due to take effect from 1 April, the start of Fujitsu's financial year. Approximately 1,500 Fujitsu Consulting staff - predominantly in the UK, but also in France, Belgium and Luxembourg - are transferring back into Fujitsu Services, which has around 13,100 staff across Europe.

The company is hoping to avoid significant job losses and office closures, but said there can be no guarantee against staff reductions.

Fujitsu's US consulting business (ex-DMR) will continue under the Fujitsu Consulting banner as the company does not operate a separate services operation in the region.

5. GETRONICS RESTRUCTURE PAYS OFF

Getronics claims it has achieved "operational recovery", reflecting the restructure it underwent following its near collapse at the close of 2002.

Getronics' preliminary fourth-quarter results show a pre-tax profit of between $41 million and $46 million, an improvement on the $14 million it reported in the final quarter of fiscal 2002.

Revenues in the quarter were down 15% at $880 million as Getronics pursued a planned reduction in product sales. Improving its revenue mix, the company said 71% of its fourth-quarter revenue was derived from services, against 29% from products - a change from 68% and 32% respectively a year ago.

Getronics said all countries performed on or above target in the quarter, including its previously loss-making Italian operation, while all services contracts up for renewal in the period were secured.

Getronics chairman and CEO Klaas Wagenaar said that, with the exception of southern Europe, the global IT and communications market showed "modest signs of recovery" during the quarter. But he suggested the overall economy needs to show at least another six to nine months of stability before clients will be confident enough to increase spending.

In the meantime, Wagenaar said Getronics will focus on improving the quality of its business with international clients, increasing collaboration with alliance partners and implementing a consistent sales and marketing portfolio.

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