Cap Gemini victim of a more severe profit warning than expected

The consulting and computer services company, hit by a recent slowdown of its activities, would loose more than 20% in Paris this morning and has announced 2.700 layoffs.

After the Canadian Nortel last week, Cap Gemini Ernst & Young is, today June 26th, in stock exchange turmoil after a “profit warning” announced early this morning. This profit warning is worse than what specialists expected. So, the security has fallen since the opening of the stock exchange in Paris. Around 10.45 am, the fall was about to 22% after having reached more than 23%!The consulting and computer services company, hit by a recent slowdown of its activities, has revised objectives for 2001. The turnover for the current fiscal year has been revised downwards to 9 billion euros instead of the 9.6 billion expected early this year. The exploitation margin has been revised downwards around 6% for the first quarter because of an economic slowdown during the second quarter.“These last weeks, activities of the group have experienced a sudden slowdown which has been reflected in a behaviour change among customers and in the averaging, the moratorium or even the pure cancellation of a significant number of important projects”, it has been stated in a press release of the group.In the same time, an important program to reduce costs has been started. They have planned to lay 4% of positions off (over a global staff of 60.000 people), that is to say 2.700 jobs. The United-States, Great-Britain, Scandinavian countries will be hit as well as the whole telecom activity. Moreover, according to the same press release, 700 employees will be turned towards more directly operational occupations. It is also planned to reduce significantly ordinary expenditures.