Accenture sounds caution as economy sputters

Reuters News
Posted: Dec 15, 2011 7:18 PM
Accenture sounds caution as economy sputters

By Siddharth Cavale

(Reuters) - Accenture Plc <ACN.N> posted strong quarterly results but the technology outsourcing and consulting company's cautious view of the second quarter amid the worsening global economy sent its shares down after market.

For the second quarter, the company forecast revenue of $6.5-$6.8 billion, a wider-than-usual range, to factor in any delays at the end of the calendar year, especially in the Eurozone.

The global economic crisis is escalating, with a worsening euro-zone debt crisis and sluggish U.S. growth.

The wide range of Accenture's revenue forecast could mean that the macroeconomy is finally catching up with Accenture, Morningstar analyst Swami Shanmugasundaram told Reuters.

"Typically, when you go into a quarter you have good visibility, and that's why you have a tight range, but it looks like they don't have too much in the pipeline like it was before," he said.

Chief Financial Officer Pamela Craig said on a post-earnings call that she does not see budgets go up very much but also does not hear about them going down.

"When you think about places like the Eurozone, the UK and Japan ... we do have some work to do to replenish the pipeline. So we're just kind of trying to take all that into account," Craig said.

The company also cut its earnings forecast for the fiscal year by 4 cents to $3.76-$3.84 per share, to reflect foreign exchange fluctuations.

Analyst Shanmugasundaram said companies are taking longer to sanction projects, leading to longer sales cycles, and that bookings, at best, are expected to remain flat from the first quarter.


Outsourcing net revenue rose 21 percent to $3.0 billion in the first quarter, while new bookings -- a key indicator of future sales -- totaled $3.6 billion.

Overall bookings at the Grand Canal Harbour, Ireland-based company jumped 23 percent to $7.8 billion.

Accenture said it signed many new contracts in technology outsourcing, notably in Europe.

Peers like Cognizant <CTSH.O> and Infosys <INFY.NS> are also looking to double their revenue in credit crisis-hit Europe.

September-November net income rose to $642.1 million, or 96 cents a share. Revenue rose 17 percent to $7.1 billion.

Accenture shares were down 3 percent at $54.70 in after-market trade on Thursday, after closing at $56.13 on the New York Stock Exchange.

(Reporting by Siddharth Cavale in Bangalore; Editing by Viraj Nair, Unnikrishnan Nair)