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Logica the dejected bridesmaid

Logica the dejected bridesmaid

Only 42 days ago the broadsheet headlines were that Logica’s poor performance would lead to yet another takeover bid, well actually speculation about a speculative bid. Under our own headline of “Always the Bridesmaid never the Acquisition” we said that it would not happen. It has not. We refuted Logica’s statements of slowdown’s in the Nordics and Benelux and laid blame at the door of under-investment; failure of Logica’s management to change with the markets; and highlighted the benefit Logica had for expansion due to smaller contracts in the market which tier one suppliers are not geared up to fight effectively.

This week, Logica announced the loss of at least 1,300 jobs, paring back on property assets, and taking write-downs on three major contracts of £39m – total £130m. It also dropped its growth estimates from 5% to 3% for 2011 as well as its expectations on achievable margins. The Financial Times headline of “Beginning or end of bad news?” is certainly the right one. What can we expect?

Well, the market’s reaction suggests some doubt – the share price dropped 16%. This means Logica is half the price it was last year. This is worrying. Let’s not start acquisition stories again, however if Logica falters again or some major project issue comes up then a predator would get a bargain.

Andy Green captured market sentiment when discussing his client experiences said “they have never been so unsure of the future”. In our opinion Logica needs a marketing and sales management jolt to leverage an excellent brand and solid client relationships. Will executive and management be given the time before investors demand real change?


Posted in Suppliers Comments: one

 

One Response to Logica the dejected bridesmaid

  1. Roger of Aldershot says:

    Sales and marketing have never been a strong point of Logica.

    This is not unusual in organsiations that have very technical roots and that goes back to the origins of Logica in London’s Newman Street.

    Excellence in business software development / integration and telecommunications services with some business consulting were the formative core competences and the expansion into the delivery of outsourced managed services was a logical step.

    However it was interesting working with clients to get Logica to submit truly commercial bids as their sales teams were often led by very technically competent staff but with limited awareness of what financial criteria mattered to the client’s management / selection team.

    That said, there were (and probably still are) some very astute commercially aware senior management who breathed life into otherwise good, technically sound, offerings.

    However on many occasions that well crafted
    commercial input was too late to save the bid from rejection in the early rounds of the selection process.

    Let us hope that they are rescued by a knight in shining armour but I cannot see one on the horizon at present.

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