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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

[...]

"That's all she wrote," we're afraid, for those of you who are NOT Annex Research clients, and who are now reading the complete Annex Bulletin, along with many  charts and tables which back up our analysis in the print edition of this particular report.

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


NOTE: The print edition of this report, of course, contains additional charts and tables not included here.

Can you afford not to know such things if you're a global competitor?  To subscribe, just click on , or call us as (602) 824-8111.







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Volume XVI, No. 2000-08
March 10, 2000

Editor: Bob Djurdjevic
Published by Annex Research;
e-mail: annex@djurdjevic.com

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