French IT services provider Atos Origin (ATOS.PA) confirmed on Friday it was in the race to buy Italian electronic payment company SIA-SSB, but said it still could not provide investors with estimates for 2010 results.
Atos kept its financial targets for this year as it met forecasts with a 5.6 percent fall in third-quarter like-for-like revenue, and continued to cut debt.
Growth in Britain and in outsourcing partly offset weak consulting and systems integrations sales, while restructuring was slightly ahead of plans for this year, the company said.
Atos, which competes with Capgemini (CAPP.PA) and Accenture (ACN.N) and wants to further expand in the profitable payment services sector, told analysts it was keen to buy SIA-SSB.
We are still in the race. We have confirmed our strategic interest for this opportunity. It's a long process ... We are still very committed, Senior Executive Vice President Gilles Grapinet said.
Last month, French daily La Tribune said Atos was in advanced talks to buy SIA-SSB, which provides credit card services to financial institutions.
NO VISIBILITY ON 2010
Atos said it would continue to focus on improving operating margin and cash this year as the environment remained difficult.
Asked about prospects for 2010, Grapinet said: At this stage, most of our clients are at the very beginning of their budgets. It would be very hazardous to make forecasts.
Nobody is really in recovery mode; it's still very challenging. I suppose we will have better visibility in the comings weeks.
Atos shares were down 0.24 percent at 1005 GMT, while Capgemini's (CAPP.PA) were up 1.27 percent.
Year-to-date order entries were 4 billion euros ($6 billion) and CFO Michel-Alain Proch said 75 percent of Q4 is covered with the backlog. The rest is covered with the pipe.
Third-quarter sales fell to 1.23 billion euros as the global economic slowdown hit consulting and systems integration sales.
Q3 sales are in line with our expectations, good cost control, and orders reassure, CM-CIC Securities said in a note.
Consulting sales fell 34 percent in the quarter on a like-for-like basis, with some large customers delaying or cancelling decisions on projects.
Britain was a bright, spot with 12.3 percent growth thanks to contribution of outsourcing and Medical Business Process Outsourcing activities.
Chairman and chief executive Thierry Breton said he was confident a cost control plan would help the group reach its objectives this year and pursue its operating margin improvement by 2011.
Atos has guided for a slight fall in 2009 like-for-like revenue, an improvement in operating margin of 50-100 basis points from 2008's 4.8 percent, and positive cash flow.
Atos managed cash well and reduced net debt by 35 million euros to 293 million euros, while absorbing 44 million euros bonus pay and 32 million euros restructuring, said Citi analysts in a note.
This is due mainly to strong working capital and capex management, and it seems that the restructuring is slightly ahead of schedule, it added.
At end-September Atos was ahead of its 2009 targets to cut staff and subcontractors and kept its expected restructuring costs at 150 million euros. It would not discuss 2010 targets as it was still assessing the impact of German retail client Arcandor's (AROG.DE) insolvency filing in June.
Atos has 450 people working on Arcandor projects.
Michel-Alain Proch said Atos was rebuilding the pipe in managed services in Germany and working on several deals to compensate for lower use of staff tied to Arcandor.