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Atos to Launch Reverse Stock Split Amid Investor Confidence Push

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French IT company Atos (ATOS.PA) will proceed with a reverse stock split, set to take effect by May 1, in an effort to restore investor confidence. CEO Philippe Salle confirmed the decision on Wednesday, stating that the board will finalize approval in the coming days before initiating the process. The move follows a major financial restructuring last year, which significantly diluted shareholder value.

The reverse split was overwhelmingly approved at a general meeting in January. Atos shares have plummeted to historic lows, now trading at approximately one-third of a cent, after completing a 233-million-euro ($248.49 million) capital increase.

The company reported an annual revenue decline of 5.4% to 9.58 billion euros, missing previous forecasts. Market weakness and contract terminations contributed to the downturn. However, Atos highlighted a recovery in order intake, securing significant contracts such as a 165-million-euro extension with Eurotower and a deal to construct Finland’s latest national supercomputer.

Atos, once valued at 10 billion euros, now has a market capitalization of 600 million euros following governance instability and a failed restructuring attempt. While the company has not issued a 2025 outlook, Salle is set to outline his vision and mid-term strategy at the Capital Markets Day event on May 14.

The French government remains in exclusive negotiations to acquire Atos’ advanced computing segment, deemed critical for national defense. This division includes supercomputers essential for France’s nuclear deterrence and military communications.

Salle, who took over as CEO last month—Atos’ sixth in two years—reaffirmed that no additional asset sales would take place in 2025. “We’re not going to rip the group apart,” he stated, citing a strong cash position of 2.2 billion euros. He also dismissed any plans to raise the asking price for Atos’ mission-critical systems business, despite increasing military expenditures in Europe.

HCLTech Shares Plunge 10% After Missing Quarterly Revenue Estimates

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Shares of HCLTech (HCLT.NS) dropped nearly 10% on Tuesday, marking their worst session since September 2015. The decline came after India’s third-largest software services provider missed revenue estimates for its third quarter and adjusted only the lower end of its full-year sales guidance.

Revenue Miss and Analyst Reactions

HCLTech reported a 5.1% year-on-year rise in consolidated revenue to 298.9 billion rupees ($3.45 billion), falling short of analysts’ expectations of 300.68 billion rupees. The miss was attributed to underperformance in the company’s software business.

Following the earnings release, at least 11 brokerages downgraded their ratings on HCLTech, and four brokerages reduced their price targets, according to LSEG data.

Guidance and Market Sentiment

Despite the disappointing results, HCLTech CEO C Vijayakumar projected an improving demand environment in 2025, echoing optimism expressed by larger competitor Tata Consultancy Services (TCS). The company revised its fiscal year 2025 revenue growth forecast to 4.5%-5% from the earlier 3.5%-5%, factoring in acquisitions.

However, analysts remain cautious. Goldman Sachs noted that the midpoint of HCLTech’s revised revenue guidance fell slightly below expectations, citing weaker growth in the software segment and the gradual ramp-up of discretionary projects. Sanjeev Hota, vice president at Mirae Asset Sharekhan, commented that the lack of an increase in the upper range of revenue guidance further dampened investor sentiment.

Market Performance

HCLTech’s shares were the worst performers on India’s blue-chip Nifty 50 index (.NSEI), which rose 0.5% on Tuesday after a 1.5% drop in the previous session. Despite Tuesday’s plunge, HCLTech had outperformed its peers in 2024, posting a 31% gain compared to a 22% rise in the Nifty IT index (.NIFTYIT).

In contrast, competitors Tata Consultancy Services and Infosys recorded gains of 8.5% and 22.5%, respectively, over the same period. On Tuesday, TCS and Infosys shares dipped by 0.31% and 0.61%, respectively.