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Terror attack whacks Cap Gemini

October 12, 2001 Posted: 0740 GMT

LONDON (CNN) -- Cap Gemini Ernst & Young warned on Friday the September 11 terror attacks has caused "significant losses in revenue" and pushed back growth.

Europe's biggest computer services company, which has announced in June plans to axe 2,700 jobs to cope with a global economic slowdown, said another 600 jobs will go and its third quarter performance would be "far below" previous objectives.

The company, formed in February last year when France's Cap Gemini bought U.S. consulting firm Ernst & Young for $11.3 billion, warned in June it was reducing its full-year sales forecast to graphic9 billion ($7.8 billion) from graphic9.6 billion.

Cap Gemini has now decided to offer no figures for the current fiscal year but said recovery in growth had been "pushed back by at least one or two quarters." The company expects its third-quarter sales will be flat or slightly negative.

"The United States is obviously the worst affected but the American recession threatens to bring about in numerous countries a crisis whose scale and length no-one dare predict," the company said.

In its earlier warning the company said it had experienced delayed and cancelled orders from customers in financial services, technology and manufacturing, especially in the U.S..

Cap Gemini, which offers companies everything from computer hardware and software packages to management consultants, said it will accelerate cost-cutting measures.

Shares in Cap Gemini (PCAP), which have fallen more than 72 percent from a January 31 peak of graphic09.80, dropped 7.9 percent to graphic57.05 in early Paris trade.

In the U.S. on Thursday Accenture (ACN: up $1.49 to $15.16, Research, Estimates) , the management and technology consulting company, said it expects to take a first-quarter charge of no more than $40 million for the terror attacks. But the company, formerly known as Andersen Consulting, posted a fiscal fourth-quarter profit ahead of analysts' estimates and said it was comfortable with their first-quarter earnings forecasts provided at the time of its initial public offering.

But earlier this week, UK software company Autonomy said it expects third-quarter revenue to fall by as much as 31 percent, in the wake of the September 11 terror attacks.



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