Accenture Reports Positive Results

Accenture (NYSE: ACN) reported good results for the first quarter of its fiscal year, which ended on November 30, 2002. Both net revenues and earnings per share exceeded analysts' consensus projections.

"We are pleased with our first-quarter results," said Joe W. Forehand, Accenture chairman and CEO in a statement.

Net revenues for the first quarter were $2.93 billion, a 2% decrease. Earnings per share for the first quarter were 27 cents a share compared with 20 cents a share a year ago.

Net revenues for Accenture's Communications & High Tech and Government operating groups increased by 12% and 7% respectively, over the first quarter last fiscal year, to $830 million and $359 million, respectively. The Financial Services operating group reported net revenues of $602 million, a decrease of 7%. The Products operating group reported net revenues of $650 million, a decline of 9%, and the Resources operating group reported net revenues of $487 million, a decline of 10%.

>From a geographic perspective, net revenues in Accenture's Europe, Middle East, and Africa (EMEA) region were $1.33 billion, a 6% decrease in local currency from the same quarter last year. Net revenues in the Americas region were $1.39 billion, a 1% decrease in local currency. Net revenues in the Asia Pacific region were $207 million, declining 8% in local currency.

How can Accenture increase profits when revenues are decreasing? The answer is, in part, by sending work off shore, and by so doing reducing some costs. In a declining market Accenture continues to gain market share at the expense of less well organized competitors.

EDS Names Robert Swan Chief Financial Officer

EDS (Nasdaq: EDS) has appointed Robert H. Swan as its new Chief Financial Officer. Swan, 42, assumes the CFO position being vacated by Jim Daley*. Daley will oversee the EDS client care organization as Executive Vice President of Client Solutions, Global Sales, and Marketing - a curious position for someone who has spent most of his career in an accounting firm. Swan will oversee all EDS financial operations, including Enterprise Productivity and Digital Transformation, Financial Analysis, Tax, Controller, Treasurer, Administration, Investor Relations, and Audit.

Swan joins EDS from TRW, where he served as CFO. He joined TRW in 2001 after two years with Webvan Group, where he served as CFO, Chief Operating Officer, and, finally, Chief Executive Officer succeeding George Shaheen. Earlier in his career, Swan served as CFO for three General Electric Company units: GE Lighting, GE Medical Systems Europe, and GE Transportation Systems.

During his career, Swan has demonstrated that he is not afraid of either risks or trouble. Webvan, which had a market cap of $8.45 billion in November 1999, went out of business while he was CEO. Yet that experience has not hurt his career. By accepting the job with EDS, Swan will be moving from a $17.2 billion provider of technology products to the aerospace, automotive, and IT industries to a $21.5 billion provider of IT services.

In September, EDS surprised analysts by announcing earnings would fall 82% short of expectations. The reason for the short fall was an attempt by the company to hedge its employee stock options with derivatives.

Derivatives are contracts derived from the underlying value of stocks, bonds, and other assets. For example, the obligation to purchase a stock at a specific price on a certain date is a derivative called a forward contract, which varies with the price of the shares. The risk to the owner of the contract is unlimited.

After cutting its guidance, EDS stock price reached record lows, which in turn raised the cost of its forward contracts. Adding to EDS's financial woes were the bankruptcies of several large customers including WorldCom, US Airways, and United Airlines. The Securities and Exchange Commission is now conducting an informal inquiry into the transactions involving derivatives.

Although the company has spent $225 million in claims to settle the forward contracts, the suspicion remains among some investors that the company may still face some form of financial risk. In an interview with author Rodger Lowenstein, former Treasury Secretary Nicholas Brady said, "Every time there's been a fire, derivative traders have been around it."**

* Jim Daley is not related to the editor.
** When Genius Failed, p. 105

Bill McDermott Cuts SAP Sales

In his first major initative since becoming CEO of SAP Americas, Bill McDermott has reorganized the sales organization and cut 132 people. SAP Americas employs about 3,400 people in its operations. In that same week, SAP (Nasdaq: SAP) reported fourth quarter license sales would be better than analysts expected, although still down from the same quarter a year ago.

The cuts were a part of a move from a vertical to a geographically organized sales team. "After spending some time looking at the company, Bill McDermott developed a plan with the ultimate goal of being as close to the customer as possible," said an SAP spokesman. "Looking at the marketing opportunity, there was some overlap."

44 sales executives were also terminated for poor performance, but SAP plans to refill those positions.

FAA Standardizes IT Support on Siebel eGovernment

The Aviation Systems Standards Group (AVN) of the Federal Aviation Administration (FAA) has standardized its IT help desk support on Siebel eGovernment. This will enable the AVN to link support desks in eight locations and lower costs associated with supporting more than 1,200 employees.

AVN's IT staff, including desktop, network, operating system support, and developers, will use Siebel eGovernment Applications to achieve their goal of providing outstanding service. Specifically, Siebel Field Service will allow AVN to:

• Integrate and consolidate eight existing help desks nationwide, and
• Develop a solutions knowledge base to establish troubleshooting standards and service best practices.

Siebel Systems Schedules Q4 Earnings Call

Siebel Systems (Nasdaq: SEBL) will announce financial results for Q4 on January 22, 2003 after the close of the market. The earnings conference call is scheduled for 3:00 p.m. Pacific time the same day. The call can be accessed at siebel.com/investor.

Know Your Siebel 7 Upgrade Options

The decision to upgrade to Siebel 7 is probably one of the most important decisions Siebel customers will have to make in the next few years. Steve Jeffes, Doug Bendinger, and Carlos Merida of Answerthink have written a detailed description of the options available to enterprises considering this upgrade. To learn more, click here for a screen version or click here for a print version of this Siebel Observer Technical Review Article.

With over 25 years combined experience, Steve Jeffes is a Managing Director and practice leader, Douglas Bendinger is a Director, and Carlos Merida is a Senior Consultant at Answerthink's CRM Solutions Practice.