What's with Logica?

Logica's profit warning was entirely unexpected. And yet I can't help thinking it shows some of the weaknesses with consulting businesses.

First of all, a major contract coming to an end - and not being replaced with new business. I'm not sure we ever have particularly good visibility of these contracts - until they don't get renewed. But I can remember two or three profit warnings in the sector that looked pretty similar. And only one (Xansa - when HBOS withdrew from a contract early) was completely unforeseen.

Secondly, a provision for delays on a contract. Okay, that's bad management. But it does happen.

What's good about that, though, is it doesn't seem to show a slowdown in the commercial sector. It just seems to show that Logica has messed things up.

What's more worrying is the statement on public sector business slowing. The software sector has been a big beneficiary of UK government spending over the past few years - and the purse strings may be tightening. I'd guess the same is true of other support services, and I wonder if we'll see further profit warnings from the likes of Capita and Serco.

Intriguingly, outside the UK, everything seems to be going well. So I get a little hunch that picking tech companies with big European operations might be smart. There aren't many of them on the London market - but there are a few. Or you could, I suppose, jump straight into German tech stocks. They're not all as big as SAP...