UPDATE: Capgemini 3Q Revenue -7.1%; Revises Down Revenue Targets

French IT-services group Capgemini SA (CAP.FR) Thursday reported third-quarter revenue fell a worse-than-expected 7.1% to EUR1.95 billion, as all its businesses continued to suffer from the economic downturn, and it revised down its full-year and second half revenue guidance.

But Paris-based Capgemini, Europe's largest computer services company, said it still expects its margin on earnings before interest and tax, or EBIT, to be around 7% this year due to tight cost control.

Still, Chief Executive Paul Hermelin was cautious, saying it is too soon to make specific forecasts for 2010.

"Although there are signs that activity is stabilizing and even picking up in some market segments, benefits are not expected to filter through immediately," the company said in a statement.

Indeed, Capgemini said it expects fourth-quarter revenue to fall about 9% on a like-for-like basis, as it did in the third quarter. Hermelin told a conference call with reporters that for the full year Capgemini expects organic sales, which strip out acquisitions, disposals, and currency movements, to fall 5.5% from a year earlier, while it expects second-half revenue to drop around 9%.

The company previously had forecast full-year organic sales would decline 3%-4%, with the second half down 4%-6%.

Reported third quarter sales of EUR1.95 billion were below an average EUR2.02 billion forecast by six analysts polled by Dow Jones Newswires.

At 0818 GMT, Capgemini shares were trading down 4.6% to EUR31, having gained about 13% since the start of the year.

To take advantage of the emerging economic upturn, Capgemini said it will launch five comprehensive service offerings between now and March 2010. "The offerings focus on high-growth markets, such as those targeted by Business Information Management," Capgemini said.

The company added that bookings in the three months to Sept. 30 amounted to EUR1.98 billion, Bookings were up 7% from a year earlier in the Outsourcing Services business. In the other three businesses, Consulting Services, Technology Services and Local Professional Services, the book-to-bill ratio remained above 1, it said.

Capgemini competes with European peers Atos Origin (ATO.FR) and U.K.-based Logica PLC (LOG.LN). Its customers include banks such as HSBC Holdings PLC (HBC) and carmakers like BMW AG (BMW.XE).

-By A.H. Mooradian and Ruth Bender, Dow Jones Newswires; [phone]; [e-mail] , [e-mail]