IT services provider LogicaCMG Plc is pulling out of two wireless software businesses and is implementing job cuts at its German operation in order to improve profitability.
The London, UK-based company gave an update on its trading in the six months to June 30, 2004, and said that the performance of its Wireless Networks division and IT services operation were in line with its previous expectations.
The Wireless Networks division reported a 13% decline in the first half of the year, which it blamed on orders which have longer delivery schedules and a more substantial solutions component, extending revenue recognition.
LogicaCMG said that it secured two contracts with major European telecoms operators to install its multimedia messaging software system during the first half of the year.
In order to further reduce costs in the Wireless Networks unit, LogicaCMG is exiting from two small units – the Epix billing platform and Migway, a messaging gateway joint venture with Teledenmark. Epix and Migway made combined revenue of 5m pounds ($9.2m) and operating losses in the first half of the year.
The IT services business, which accounted for 84% of revenue in 2003, included a strong outsourcing performance in the first half. However, LogicaCMG said that services revenue was down 3% sequentially due to a decline in its revenue in Germany, where it is making headcount reductions at a cost of 17m pounds ($31.3m) to be accounted for in the second half. The company expects the German arm to be profitable in 2005.