Cap Gemini profit slumps

February 21, 2002 Posted: 1003 GMT

LONDON (CNN) -- Cap Gemini, Europe's biggest computer services company, said 2001 profit tumbled as customers delayed orders.

The Paris-based company warned first-quarter revenue would be "significantly lower" than the first and fourth quarter of 2001 as a seasonal increase in demand did not materialise. 

Like many of its rivals, Cap Gemini has sought to cut 5,400 jobs to improve profitability as a global economic slowdown forced many of its corporate customers to delay or cancel technology upgrades or new orders.

"The group's objective is to recover growth and make significant improvement in operating margin as quickly as possible," said the company.

Net income fell to 152 million ($132 million) from a proforma profit – an estimation of profits had the company's acquisition of Ernst & Young been in effect from the beginning of last year -- of 547 million a year ago.

Cap Gemini was brutally hurt by the September 11 attacks, which particularly struck confidence in the United States, where it makes 35 percent of its sales since acquiring consultant Ernst & Young.

"The real turnaround cannot be expected before the middle of the year," said the company.

Cap Gemini's stock, which has lost more the 60 percent of its value over the last 12 months, fell 2.7 percent to 74.50. The company's stock hit a high of 209.80 in January last year and has been as low as 49 following the September attacks.