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Bull: publication of activity for the third quarter of 2008

Confirmation of 2008 EBIT objective at the upper end of the initial range, between €25 and €27 million Bull's core business activities record notable growth Key figures for the third quarter of 2008 (unaudited data)

  • Order intake increased by 3.3%, with particularly good performance in the Hardware & Systems Solutions business (+15.1%)
  • Consolidated revenue amounted to €240.7 million, a slight fall of 1.1% (or -0.4% after taking account of the effect of exchange rates), and in line with second-half objectives
  • Refocusing on the Group's core strategic offerings continues: 7.5% growth in the Services & Solutions business and 5.4% in Hardware & Systems Solutions; deliberate reduction of 39.2% in sales of third-party products

Outlook: Bull confirms that its EBIT (see glossary) objective for 2008 is between €25 million and €27 million, at the upper end of the previously announced range and above the 2007 EBIT level.

Paris, October  30, 2008 -

Unless otherwise indicated, comparisons are made compared to the equivalent year-ago quarter, based on published figures.

Hardware & Systems Solutions
The refocusing on the Group's new offerings is clearly reflected in the Hardware & Systems Solutions segment. Order intake for the segment was up (by 15.1%) for the fourth successive quarter. Orders for open servers and the Group's High-Performance Computing (HPC) offerings made a particularly significant contribution to this growth.
Revenues of €66.9 million represented an increase of 5.4%. In addition, new integrated solutions offerings based around secure storage solutions and HPC grew strongly, confirming that the Group has made the appropriate strategic choices in this area. Since the beginning of the year, these growth areas have compensated for the decline in mature offerings.

Services & Solutions
Revenues from the Services & Solutions business were €111.1 million in the third quarter, an increase of 7.5%. Business continued to be especially robust in the Telecoms market, particularly among operators in emerging countries. Growth recorded in the first nine months is +15.7% compared with the same period in 2007, significantly stronger than that of the market. Order intake of the Services & Solutions business during the quarter fell slightly (-2.7%) in the wake of a particularly dynamic second quarter (+27.4%).

Maintenance & PRS
Revenues from the Maintenance & PRS segment of €46.8 million represented a fall of 7.1%. This decline is the result of a number of support contracts for proprietary servers coming to an end, as anticipated. During the first nine months of 2008, the overall fall in revenues was -7% compared with the same period in 2007.

Fulfillment & Third Party Products
Revenues from Third-Party Products, at €16.0 million, fell sharply as a result of the Group's deliberate decision to concentrate its resources on its core offerings: with a 39.2% reduction recorded for the third quarter. Overall, for the first nine months of the year the fall in revenues was -35.3% compared with the same period in 2007.

Revenue evolution by business segment (unaudited data):


Third quarter

Euros millions

2007*

2008

Variation

Revenue

243.3

240.7

100%

-1.1%

Services & Solutions

103.3

111.1

46.2%

7.5%

Hardware & Systems Solutions

63.4

66.9

27.8%

5.4%

Maintenance & PRS

50.3

46.8

19.4%

-7.1%

Fulfillment & Third-Party Products

26.3

16.0

6.6%

-39.2%

* For comparative purposes, the consolidated revenue as published for 2007 is broken down here according to the new segmentation.

Revenue breakdown by geographic area (unaudited data):


Third quarter

Euros millions

2007

2008

Variation

France

119.7

126.9

53%

6.0%

Western Europe excluding France

69.9

61.1

25%

-12.6%

Eastern and Central Europe

13.2

16.4

7%

24.2%

Americas

21.0

19.8

8%

-5.7%

Rest of the World

19.5

16.5

7%

-15.4%

Total

243.3

240.7

100%

-1.1%

Group financial position
The Group's financial position remains healthy. The cash position shows marked seasonal variations, as in previous years. The end of September habitually marks a low point in the cash position, mirroring the trend in revenues, which is unevenly split between the two quarters of the second half of the year.

###


Key highlights of the third quarter 2008

High-Performance Computer simulation: Bull confirms its growing strength

Four major events highlight Bull's growing strength in this area:

  • Forschungszentrum Jülich (the Jülich Research Center) - Germany's leading High-Performance Computer simulation center - has chosen Bull to supply one of the most powerful supercomputers in Europe. Designed and developed as part of the JuRoPa (Jülich Research on Petaflops Architectures) project, for which Bull is the prime contractor, the supercomputer will be used in numerous scientific areas, including researching new molecules and new drugs, exploring the origins of the Universe, high-energy physics, and global warming. It will be operational in early 2009.

  • Bull announced the acquisition of "science+computing ag" ("s+c"), a major supplier of High-Performance Computing (HPC) solutions and services in Germany. The acquisition is one of the Group's largest since 2005, and is fully in line with its strategic repositioning. "s+c" will bring very extensive experience in solutions and services, particularly in the industrial sector, to the Group.

  • In France, the French Atomic Energy Authority (the CEA) and Bull signed a collaboration contract to design and deliver Tera 100, the future supercomputer destined for the French Nuclear Weapons Simulation Program. This contract consists of two phases: a significant R&D program to develop the Tera 100 supercomputer, and the acquisition of this, the first petaflops-scale system designed in Europe.

  • Finally, the French government recently unveiled its 'Digital France 2012' plan, which devotes a great deal of space to computer simulation focused around five key proposals: widening access to High-Performance Computer simulation amongst SMEs; extending French presence in dedicated software; strengthening higher education in this area; hosting one of the major European HPC centers as part of the European PRACE program; and exploring the possibility of launching a large-scale European collaborative supercomputer program, drawing on the expertise of top-ranking players in the industry such as Bull.

Green computing
Bull has further enhanced its Bio Data CenterTM offering, by launching new solutions and services in partnership with leading companies in various areas, with the aim of combining performance and flexibility with sustainable development.

Bull and Schneider Electric are pooling their expertise to offer a comprehensive energy audit service for Data Centers, to help businesses tackle the growing challenge of energy efficiency. The service provides organizations with the indicators they need to define practices that are environmentally-friendly, sustainable and strengthen their eco-initiatives, while improving performance.

Putting enterprise applications at the heart of Data Center energy efficiency, Bull and SAP Research have also launched a joint initiative to develop a global approach to Data Center energy management. This new approach, involving both business applications and user services, aims to refine 'sustainable' technologies for the Data Center; using server technologies developed by Bull to achieve intelligent energy management in the new generation of Data Centers.

Storage
Bull announced the opening of its StoreWay Solution Center, an international center of expertise dedicated to data protection and virtualization technologies, operated in partnership with EMC, world leader in information infrastructure solutions. The Solution Center - which is attached to the Bull Center of Expertise and Services Center in Grenoble, France - is a veritable showcase for information infrastructure solutions capable of responding to the toughest challenges in data administration.

And finally, globull is set to benefit from an excellent commercial boost over the next four years, with the establishment of framework agreements authorizing all public sector and government bodies in France to equip themselves directly with the world's most secure mobile security platform.

Services: proven expertise in mission-critical applications and complex IT infrastructures
Vedior Group in France, a major player in human resources and recruitment, has turned to Bull to host its Web servers and its production information system consisting of over 500 heterogeneous servers. The challenge for Vedior was to ensure that it had a scalable IT infrastructure that was both reliable and secure, and could meet very demanding service continuity and confidentiality requirements, against a backdrop of overall cost rationalization.

In Brazil, the Group's designation by Anuario Telecom - the most important publication in the telecoms industry - as the best supplier of systems integration services for telecoms operators, illustrates the leading position that Bull has achieved in this sector.

Bull, a pioneer in Open Source, driving future competitiveness
Bull is the co-founder, along with other major European players in IT and telecoms, of the Open World Forum, a major new global event dedicated to Open Source. The Forum, being held in Paris, will bring together all the key global technology and software players, two major French competitiveness clusters, large R&D communities, leading international research bodies and a vast international network of SMEs.

Through this initiative, Bull is reaffirming its ambitions in the field of Open Source, one of its major areas of expertise.

###

Outlook

Didier Lamouche stated: "We embark on the final quarter of 2008 with an increased order book. In addition, taking into account the results we achieved in the first nine months of the year we can confirm that our target EBIT for 2008 is higher than that recorded in 2007 and is in the upper end of the range indicated at the start of the year, i.e. between €25 million and €27 million."
"Despite the difficult economic environment, we are continuing with our repositioning of the Group with our recent announcements of the sale of our Medicaid business in the US and acquisition of the German HPC specialist "s+c ag". We believe that the strengthening of the Group's strategic offerings, as well as the defensive profile of our customer base will prove to be real assets for Bull in a market that will undoubtedly be less dynamic in 2009 than it was this year. We will continue with our transformation of the Group."

Glossary:
EBIT: Earnings before Interest and Taxes, non-operating and non-recurring items and contribution of equity affiliates.

About Bull

Bull is an Information Technology company, dedicated to helping Corporations and Public Sector organizations optimize the architecture, operations and the financial return of their Information Systems and their mission-critical related businesses.

Bull focuses on open and secure systems, and as such is the only European-based company offering expertise in all the key elements of the IT value chain.
For more information visit: http://www.bull.com/

Press contact
Anne-Marie Jourdain - Phone: +33(0)1 30 80 32 52 - E-mail: anne-marie.jourdain@bull.net
Investor Relations
Peter Campbell - rue Jean Jaurès - 78340 Les Clayes sous Bois - France
Phone: +33(0)1 30 80 32 36 - E-mail: peter.campbell@bull.net

###

Annex

Quarterly revenues published for the financial years 2008 and 2007

 

€ millions

First
quarter

Second
quarter

Third
quarter

9 months
to end Sept.

2008

Services & Solutions

106.6

133.4

111.1

351.1

Hardware & Systems
Solutions

58.1

97.9

66.9

222.9

Maintenance & PRS

48.6

51.4

46.8

146.6

Fulfillment & Third-
Party Products

21.2

33.4

16.0

70.6

Total

234.5

316.1

240.7

791.2

2007

Services & Solutions

95.5

104.7

103.3

303.5

Hardware & Systems
Solutions

64.2

95.6

63.4

223.2

Maintenance & PRS

52.9

54.5

50.3

157.7

Fulfillment & Third-
Party Products

34.6

48.3

26.3

109.2

Total

247.2

303.1

243.3

793.6

Numbers may not add up precisely to 100% due to rounding.

Disclaimer
This Press release includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause expected results to differ.
Although Bull believes that its expectations and the information in this Press release were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the expected results will be as set out in this Press release. Neither Bull nor any other company within the Bull Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Press release, and neither Bull, any other company within the Bull Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Press release.

REMINDER:

Segmentation of Group business activities
In order to more effectively reflect its business activities, from 2008 Bull has adopted a new segmentation which describes its offerings more accurately in line with the criteria of the market in which it operates.

The Services and Solutions segment includes all business activities linked to services: consulting, systems integration and outsourcing, licenses for both for Bull and third-party applications, and IT security and sector-specific software solutions. This way of presenting the services and solutions business is therefore more comparable with other companies operating in the same sector.

The Hardware and Systems Solutions segment includes the Group's core product offerings including integrated solutions based on Bull GCOS, Escala and NovaScale solutions, and secure storage, including the High-Performance Computing (HPC) growth offerings. It reflects the Group's evolution from being a hardware manufacturer, to being an architect of integrated solutions. Bull hardware supplied as part of systems integration contracts continue to be accounted for under this segment.

Finally, Maintenance and Product-Related Services (PRS) remains the segment covering business activities relating to maintenance of Bull and third-party products.

The Fulfillment and Third-Party Products segment includes third-party IT hardware - not in the Bull catalogue - distributed by Bull at the request of its customers. This no-strategic offering is designed to support customers who are looking for a single supplier for all their IT requirements. Separating this business into a dedicated segment should make it easier to understand.


Contact
Bull
Aurélie Negro
5 Bd Gallieni - 92445 Issy Les moulineaux Cedex - France
Phone: +33 1 58 04 05 02
E-mail: aurelie.negro@bull.net


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CONTACT

Aurélie Negro
+33 1 58 04 05 02
aurelie.negro@bull.net