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The inevitable profit and revenue warning, and the inevitable restructuring, that is.
When Logica announced its 2010 results in February I said that they would ‘miss’ in 2011 (see Logica’s margin challenge) mainly because Logica was not in sound enough shape with its cost base to handle inclement weather, let alone an economic storm.
So, the less-than-veiled warnings that started back in August (see Logica’s margins re-challenged) and confirmed last month (see Logica UK shines as group margins slip) has turned into a fully-fledged warning on profits, and a downgrading of revenue growth forecasts to ‘around 3%’ rather than above 3%. Frankly, I would say even that level will be ‘challenging’.
As a result, Logica will lay off over 1,300 staff, distributed between Benelux, Sweden and Logica’s infrastructure management business. Logica will also take major write-downs on certain long-term contracts.
This would have been upsetting news for Logica’s employees at any time, let alone now. I think much of this pain could have been preempted had ‘bullets been bitten’ while times were relatively buoyant. I am sure investors will be asking CEO Andy Green some very demanding questions.
There is a concall shortly and I will bring you more at the end of the day.
