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October 18, 1987


By CBR Staff Writer

Sales at Compagnie des Machines Bull SA are below target this year, and there is no way that the fourth quarter is going to rescue the year, president Jacques Stern told Reuters. We fixed a target range for growth in 1987 at the beginning of the year, and know now that we will not be within the lower limits, he admitted. Nevertheless once out of this phase, two or three years on, we will move into a period of exceptional growth. The French flagship computer company, which now rules the old Honeywell Information Systems empire as well as its own fiefdom, came back into profit last year, doing about $45m for 1986, but in the first half, net profit fell to $6m, the reason being a sales slow-down in the home French market, which accounts for two thirds of turnover. In part, Jacques Stern blames lack of standards for the dull patch, saying that the industry is in its third wave, that of distributed processing, the first two being batch and centralised on-line processing. He reckons that the continuing lack of standards is slowing the whole industry down, adding if Europe cannot agree on telecommunications tariffs, hardware sys-tems or software language, the economy in every company of the Community will suffer. Once, how-ever, an international information network is built, there will be an explosion in demand, he reckons. As for Bull itself, a major priority remains the strenghthening of the balance sheet. In 1983 its debt to equity ratio was a daunting 8:1, but $600m in subventions from the French government, coupled with improved cash flow, has brought the ratio down to 1.6:1, and the – attainable – target is 1:1 in 1990. And with privatisation of the state-owned firm looming, that is vital. The company is on the list for privatisation, but no date has been set for the state sell-off, and according to Stern, it will not happen before the company feels ready and happy to go; a golden share will guarantee its continued independence and French ownership. Not that Machines Bull is 100% state-owned anyway: the government has 90.5%, but bonds convertible into 32% of the enlarged equity are already traded, and in March, the firm issued $63.5m of bonds which are convertible into 7% more.

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