Europe's largest IT services group, Cap Gemini Ernst & Young, reported dismal full year results and warned of a difficult first half to 2002.

CGEY, regarded as a bellwether for the IT services sector, revealed a dramatic slide in net profits to EU152 million for 2001, compared with pro forma profits of EU547 million in 2000. Revenues fell to EU8.4 billion, from EU8.5 billion. The French group added that first quarter sales would be significantly below figures for the first and the fourth quarters of 2001.

It blamed current problems on the continued market slowdown and difficulties integrating the consulting arm of Ernst & Young, which it acquired in 2000. CGEY has been severely criticised for the purchase – the largest in its history – which boosted the company's US presence just as the economy started deteriorating.