Cap Gemini posts 500m loss as revenues shrink
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Cap Gemini Ernst &Young has recorded a net loss of 514 million for 2002, following a 16% drop in revenue to 7.05 billion.
28 February 2003 Cap Gemini Ernst &Young, Europe's biggest computer services company, has recorded a net loss of €514 million for 2002, following a 16% drop in revenue to €7.05 billion.
However, CEO Paul Hermelin reported that the company's restructuring, instigated in December 2001, is running according to plan. During 2002, Cap Gemini reduced its headcount by 5,077, from 57,760 to 52,683.
The operating environment will also remain tough, said Hermelin. He forecast a slight revenue decrease in the first half of 2003, followed by a stabilisation of sales in the second half.
Much of Cap Gemini's difficulties can be sourced to its $10.7 billion acquisition of Ernst &Young's consulting business in March 2000. Not only did it buy at the top of the market, but it mishandled the subsequent integration and has missed many of the growing opportunities in outsourcing that have arisen during the economic downturn.
Hermelin has since renewed Cap Gemini's focus on outsourcing and in 2002 boosted its share of group revenue from 21% to 27%. However, that is less dramatic than it sounds, representing an increase of just €135.33 million, from €1.77 billion to €1.9 billion. That pales into insignificance compared to the multi-billion outsourcing deals that IBM Global Services and EDS were signing in the last quarter of 2002.
