Table: Backlog Backlash
The growth rate of technology-services firms is closely tied to the health of their contract backlog. But many deals are being pared back through renegotiations, which could dampen the outlook for services companies. Here's a sample:
ORIGINAL CONTRACT NEW DEAL
IBM On Mar. 28, 2001, digital By last December, NeTune film startup NeTune Com- was forced to rework its munications, signed a five- deal due to slowing year, $112 million contract growth. Now, IBM is with IBM to handle its tech- managing just a handful nology needs. of tasks, and the deal is worth less than $10 million.
CAP GEMINI ERNST In the winter of 2000, Last fall, Sprint re- & YOUNG Sprint signed a six- worked the contract and year, $600 million out- cut the number of people sourcing deal with Cap from 500 to 190 that are Gemini Ernst & Young devoted to Sprint's for the development and software. Now, the deal maintenance of its is worth about $200 software applications. million.
IBM On June 10, 1999, Ames In Chapter 11 since Department Stores agreed August, 2001, Ames has to a $112 million, five- closed 148, or 31%, of year contract to out- its stores. The out- source all computer and sourcing costs of its network operations to IBM. renegotiated contract have been "reduced proportionately."
COMPUTER SCIENCES On Aug. 2, 2000, Nortel Last summer, Nortel Networks signed a seven- reworked its contract. year, $3 billion deal With 42,000 workers, with Computer Sciences down from 95,000 in to manage its data center, 2000, Nortel needs less applications, and PC help. Analysts say the support. deal's annual revenue has been halved.
Data: Company reports