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Cap Gemini Net Beats Estimates on Technology Rebound

Cap Gemini Net Beats Estimates on Technology Rebound
Cap Gemini said it is proposing a dividend for 2010 of 1 euro a share, up from 80 cents in the previous year. Photographer: Antoine Antoniol/Bloomberg

Feb. 17 (Bloomberg) -- Cap Gemini SA, Europe’s largest computer-services company, said full-year profit rose 57 percent on stronger technology demand, beating analysts’ estimates. The company’s shares had their biggest gain in almost seven months.

Net income at the Paris-based company rose to 280 million euros ($380 million), or 1.80 euros a share, from 178 million euros, or 1.16 euros, last year. Analysts had estimated net of 260 million euros. Sales rose 3.9 percent to 8.7 billion euros.

Chief Executive Officer Paul Hermelin is looking to increase sales by between 9 and 10 percent this year as the company, like other computer-service providers, gains from a rebound in corporate technology spending. Atos Origin SA, Cap Gemini’s largest domestic rival, yesterday said its full-year profit more than tripled, aided by higher-margin sales.

“There is a rebound in the sector, even if it’s gradual,” Hermelin said on a conference call with reporters today. Cap Gemini will hunt for small technology acquisitions, plus one or two “medium to large” deals each year, he said.

The company’s shares rose as much as 6.6 percent, the biggest intraday gain since July 29. They traded 5.9 percent higher at 42.21 euros as of 9:07 a.m. in Paris, giving the company a market value of 6.5 billion euros.

Last year, Cap Gemini paid 233 million euros for control of Brazilian IT company CPM Braxis, in addition to buying small companies in areas such as energy systems.

More Competition

Cap Gemini said it is proposing a dividend for 2010 of 1 euro a share, up from 80 cents in the previous year. The company, whose operating margin slid 0.3 percent to 6.8 percent of revenue last year, expects a 50 to 100 basis points improvement this year.

“Most cyclical businesses” in North America had sales growth of 10 percent in 2010, driven by technology and financial services, the company said. In France, sales fell 1 percent over the year, with growth in the fourth quarter.

The company will soon face a stronger local rival in Atos, which is scheduled this year to complete a merger with Siemens AG’s computer-services unit to leapfrog Cap Gemini as the No. 1 computer-services provider in Europe.

In the meantime, Cap Gemini is expanding its offerings in cloud computing and energy management services for utilities, which may attract as much as $46 billion in spending on so-called smart grids by 2015, according to ABI Research.

To contact the reporters on this story: Matthew Campbell in Paris at

To contact the editor responsible for this story: Vidya Root at

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