Reuters, Sat Oct 10, 2009 11:08am EDT
FRANKFURT, Oct 10 (Reuters) - Deutsche Telekom's (DTEGn.DE) business client unit T-Systems is close to securing an outsourcing deal worth hundreds of millions of euros with Philips (PHG.AS), a company spokesman said.
Maarten de Vries, a member of Philips group management committee, told India's Economic Times in an interview published on Friday: "Philips will announce a new outsourcing contract with T-Systems, a European service provider, this week."
But the T-Systems spokesman cautioned there were was still work to be done and declined to give details on a timeline, saying only: "We're confident it will come to a conclusion."
Separately, Germany's Boersen-Zeitung said in its Saturday edition T-Systems expects the order intake to pick up in the second half of the year when compared with the first half, citing an interview with T-Systems chief Reinhard Clemens.
T-Systems, which provides IT and telecoms services for businesses as well as for German federal and municipal governments and European public administrations, has been struggling with shrinking sales and low margins.
Clemens expects an "extremely conservative" business year 2010, and reiterated he expects the T-Systems division to reach an earnings before interest and taxes margin, or EBIT margin, of between 5 percent and 8 percent by 2011, the paper said.
The average profit margin in the sector is in a range of 5-10 percent, which competitors such as Atos Origin (ATOS.PA) and IBM (IBM.N) already have today.
Costs will be brought down through outsourcing deals which are expected to lead to 3,000 job cuts in Germany, which the unit had agreed on with unions in August.
Clemens further told Boersen Zeitung he expects to overhaul the businesses in Poland, Russia, and China as part of a restructuring of the company.
(Reporting by Edward Taylor and Nicola Leske; Editing by Andy Bruce)
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