SERVICES

Analysis of Cap Gemini Group’s Preliminary 1999 Business Results

Wimpy 1999 Growth

But Company Expects to Return to Double-digit Growth in 2000, Grow by Acquisitions, Such As That of Ernst & Young Consulting

W. AUSTRALIA, Mar. 10 – After wowing the IT services world with its spectacular revenue and profit surge a year ago, which earned Cap Gemini Group (CGG) a tie with Andersen Consulting for the gold medal in the Annex Research 1999 “IT Services Hexathlon”, this Paris-based competitor produced a wimpy growth figures last year, according to its preliminary 1999 results. 

Revenues were up a mere 2% in U.S. dollars, after surging 37% last year (1999 revenues were up 9% and 28% respectively in euro (€) or French Francs).

Echoing some of the IBM-sounding woes from the second half of 1999 (see “A Slam Dunk of Bunk”), CGG blamed the Y2K and the American market for a slowdown in demand.  But the U.S. market, which accounted for only 14% of CGG business, has never been much of a driving factor for this Euro-centric IT services competitor. So CGG’s 1999 growth woes may be related, in part, to factors which are uniquely European. 

One of them the “euro,” which prompted a surge in spending by governments and businesses before the new European currency basket rang in its presence in the global markets on Jan. 1, 1999.  After every upturn, there is a downturn; after every hill, there is a valley.  And so, in 1999, CGG rode into a valley after scaling the “euro” peaks the year before. 

At least it’s only a valley, rather than a brick wall.  Which is why the company’s management seemed brave enough to forecast that, “in 2000, (a) gradual upturn in the market should allow CGG to resume an average two-digit growth figure,” and to achieve (an) operating margin “comparable to that of 1999.”

[...]

Our report then goes on analyze CGG's recent acquisition of Ernst & Young Consulting:  

CGG still has a ways to go from the U.S. shares of revenues which the other top five global competitors claim (EDS, IBM, CSC and Andersen Consulting), but the E&Y acquisition will put CGG on the map of the leading U.S. IT services companies.

[...]

Here are some of the sub-headings from the rest of this Annex Bulletin...

CGG Buys Ernst & Young Consulting

Geographic/Industry Segment Analysis

... plus our "PS" about EDS:

A Special “PS” to the Annex Bulletin 2000-08

EDS, Two Other Companies, Duped in a Bogus NATO Contract

“Stealth Customers” Abscond with Tens of Millions of Dollars-worth of Equipment

[...]

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To find our how you can become one of our clients, and read the rest of this and other Annex Bulletins, click on . Thank you.

Happy bargain hunting!

Bob Djurdjevic