Capgemini: Silence on Atos Origin rumour

Date: 26-04-2007
Source: Reuters

Capgemini , Europe's largest computer consultancy, raised its 2007 sales goal on Thursday after stronger-than-expected first-quarter sales driven by growth in its outsourcing business and an Indian acquisition. Capgemini's first-quarter sales rose 18.5 percent to 2.214 billion euros ($3.02 billion) against 1.869 billion in the same quarter of 2006. Like-for-like sales growth was 14.2 percent.

The average forecast of 10 analysts polled by Reuters for revenue was 2.114 billion euros. Revenue at its Indian acquisition Kanbay was 93 million euros in the quarter, like for like growth of 27 percent.

"It seems the acquisition by Capgemini has not disrupted momentum and this is encouraging," Citigroup said in a note.

By 07:34 GMT, Capgemini shares were up 2.3 percent at 59.45 euros, outperforming the European technology sector.

CEO Paul Hermelin was tight-lipped on a report the group had dropped plans to buy domestic rival Atos Origin , which has said it had received takeover interest.

"I have no comment on Atos," Hermelin said, adding a Capgemini shareholders meeting that was due to start at 0800 GMT may raise the issue.

Challenges.fr, the website of French weekly magazine Challenges, reported on Wednesday that Capgemini's board had decided against trying to buy Atos Origin.

Challenge quoted a Capgemini board member as saying a deal with Atos Origin would weaken Capgemini against its U.S. rival Accenture .

Outlook
Commenting on the outlook for 2007, Hermelin said: "We had a like-for-like sales growth forecast of 8 percent, and we are raising it to 9 percent."

This would be a slowdown from 12.1 percent growth achieved in 2006. Capgemini has attributed that slowdown to the maturing of large outsourcing contracts which have been the main growth boosters.

Capgemini also kept its targets to lift operating margin to 7 percent of sales in 2007 and to 8.5 percent in 2008 from 5.8 percent in 2006.

The outsourcing division had revenue growth of 18 percent, helped by the ramp-up of several major contracts.

Revenues from consulting and technology services rose 12 percent while those of the Sogeti local professional services unit rose 8 percent.

Bookings for the first-quarter, however, declined to 2.148 billion euros from 2.990 billion, due mostly to outsourcing whose bookings last year were boosted by large contracts with General Motors and Britain's revenue and customs department. Booking in consulting services, technology services and local professional services rose 14% in the quarter.