TMT SUMMIT: Capgemini CEO: Co Eyes Acquisitions In US, Asia
BARCELONA (Dow Jones)–French IT services company Capgemini’s (CAP.FR) chief executive officer Thursday said the company is looking at acquisitions in the U.S. and Asia as it wants to grow its presence outside of Europe.
“On the acquisition side, you will see us move. We need to grow our presence outside of Europe,” Paul Hermelin said, speaking at the Morgan Stanley Technology, Media and Telecoms Conference in Barcelona.
Acquisitions could be on the scale of “a few hundred million,” but won’t be “mega deals,” he said.
The CEO said that he doesn’t aim to be among the top five players in the U.S., referring to a recent interview in the Financial Times, but that the company aims to be among the top five “in some areas [in which] it will decide to fight.”
At this stage it looks like 2010 revenue may be “close to flat,” the CEO also said, cautioning however that the group is still in the budgeting process and that the evolution of the economic backdrop remains very difficult to predict.
Capgemini, Europe’s largest computer services company, earlier this month revised down its full year and second half revenue guidance. The group expects organic sales, which strip out acquisitions, disposals, and currency movements to fall about 9% in the second half and around 5.5% in the full year.
The IT services sector has been hard hit by the economic crisis as companies have scaled back on new projects, which has in particular hit consulting activities.
Price pressure is still very present and likely to persist early next year, the CEO said.
“Hopefully 2010 will be a year that ends with sustainability so that we can then resume a margin progression,” he said.
Early November, the group confirmed it still expects its margin on earnings before interest and tax, or EBIT, to be around 7% this year due to tight cost controls.
He said the group should generate good cash flow in 2009 and that the board will decide what to do with it. He said he doesn’t think the group should buy back shares massively and that he’s not opposed to an extraordinary dividend.
