IT services firm Bull looking at buys again

PARIS (Reuters) - French computer services group Bull is looking more actively at acquisitions after focusing on cost control amid a global economic slowdown, its chief executive said.

Bull has been profitable since 2007 after it was rescued in 2004 from financial collapse by the French state, then a shareholder.

Didier Lamouche told a Reuters small and mid-cap IT services forum that a target for 2009 earnings before interest and taxes (EBIT) of over 25 million euros was "realistic" in the current economic climate.

With the third quarter showing the same trend as the second quarter for the group's businesses, Lamouche said he still expected 2009 sales to be more or less flat, at constant scope.

With clients ranging from France's Atomic Energy Authority (CEA) to Insurer Groupama and a market capitalization of 310 million euros, Bull competes with global giants such as IBM or Hewlett-Packard.

"The end of last year was dedicated to cost cuts and then the crisis came. We focused less on external growth. Today we are opening up to the possibility...We are looking around a little bit more actively than a year ago," he said.

Bull made 42 percent of its 2008 revenue of 1.133 billion euros in the public sector, and 52 percent in France.

The group has said its focus for 2009 was cost reductions, gross margin protection and cash management.

Lamouche would not discuss any potential target he was looking at.

He said that Bull's strategy was to look at small-sized deals aimed at securing expertise and technologies but also to consider larger deals that could more significantly increase the group's size.

In 2007 Bull held talks with French IT services company GFI over a possible tie-up, but in the end the deal fell through.

In the last four years Bull has refocused its business on value-added activities such as secure storage or high-performance computing, notably through targeted acquisitions.

Until now Bull has funded small purchases with cash but were it to embark on a large acquisition, it was prepared to also pay with shares or to use debt, Lamouche said.

Net cash stood at 250 million euros at end-June 2009.

In the meantime cash would be dedicated to protecting the group against a global downturn, whose end was hard to predict, he said. It will also be used to upgrade data centers to meet green IT standards as well as to hire staff.

Bull employed 7,880 people at end-2008.

In July, Bull reported slightly better-than-expected first-half earnings, higher order intakes in all its core divisions and it raised its 2009 guidance for Earnings Before Interest and Taxes (EBIT).

Asked about visibility for the third quarter, Lamouche said: "We do not see a significant change in trend. There are some opportunities but decision-making is slow. I would say the situation is stabilizing. Our business is on the same trend as in the second quarter"

Bull reports third quarter revenues on October 30.

France, The Netherlands and Belgium were the most resilient markets, and there were some upturn signs in Germany, he said.

Asked about orders for the third quarter, Lamouche said:

"We had said the third quarter would be difficult. The third quarter is traditionally soft, and the economic climate did not improve the situation."

Bull was still banking on a more solid fourth quarter for orders, he added.

Bull, which has yet to pay a dividend, had no plans to change its distribution policy in the short term, he said.

Its shares have gained 180 percent so far this year after falling 69 percent last year.

(Reporting by Dominique Vidalon, editing by Marcel Michelson)