(Updates with conference call, Atos shares, analyst comment, starting in third paragraph)
Feb. 23 (Bloomberg) -- Atos, the French computer-services supplier for the Olympic Games in London, plans to raise its operating margin this year as it sees demand for software services holding up in Germany and central and eastern Europe.
Atos, which competes with France’s Cap Gemini SA, predicted that the operating margin will reach 6.5 percent in 2012, and that free cash flow will be about 250 million euros ($333 million). The company said today it will post a “slight” increase in sales at existing units.
“There are zones in Europe where demand is holding up and where clients are ready to invest in big projects,” Senior Executive Vice President Gilles Grapinet said on a conference call. “That is a positive indication as far as demand goes for software and tech in Europe.”
Atos rose as much as 3.7 percent after erasing an 11 percent tumble at the open on what may have been an execution error, said Yves Marcais, a sales trader at Global Equities in Paris.
“I think it was a fat finger,” he said. “It isn’t that easy to cancel such a trade. That’s part of the risk of the job. If you miscalculate by one zero, you can push down the market.”
The shares advanced 0.2 percent to 43.22 euros at 11:30 a.m. in the French capital.
Caroline Tourrier, a spokeswoman for NYSE Euronext in Paris, said the exchange halted trading of the shares for two minutes after the decline.
“After the abrupt drop, we applied the market rules and halted the shares,” she said. “Then the share trading balanced itself out on its own.”
Net income jumped 57 percent in 2011 to 182 million euros, while sales rose 36 percent to 6.8 billion euros, Paris-based Atos said in a statement. Analysts were expecting net income of 220 million euros on sales of 6.8 billion, according to estimates compiled by Bloomberg.
“A lot of our sales are recurring, so we have little trouble predicting revenue trend,” Grapinet said, citing a pipeline of business worth 5.3 billion euros at year-end and order intake of 2.5 billion in the fourth quarter.
Earnings were helped by the purchase of Siemens IT Solutions and Services in July. Atos, which expanded in Germany and central and eastern Europe with the Siemens IT takeover, said revenue at existing units rose 0.3 percent in 2011.
Operating profit last year totaled 422.4 million euros, raising the margin to 6.2 percent of revenue from 4.3 percent in 2010 at existing businesses and excluding currency effects. Analysts had predicted an operating margin of 5.2 percent.
“This set of strong figures confirms the smooth integration of Siemens IT and adds visibility to the guidance,” Kepler analyst Laurent Daure wrote in a note. Daure has a “buy” recommendation on Atos with a share price estimate of 47 euros.
Atos stock has jumped 30 percent in 2012, compared with a 36 percent rise of shares of Cap Gemini.
Cap Gemini said last week that sales progress showed no sign of slowing down in the first weeks of this year. France’s biggest computer-services company predicted that its operating profit margin will rise this year amid “limited” revenue growth.
--With assistance from Beth Mellor in London. Editors: Kim McLaughlin, Tom Lavell
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