Accenture Q1 profit shrinks

CIOL Bureau
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NEW YORK, USA: Technology outsourcing and consulting company Accenture Plc reported a fall in first-quarter earnings and gave a sales outlook for the current quarter that was weaker than analysts' expectations.

The company also saw no economic impact from rebranding after terminating its sponsorship arrangement with golfer Tiger Woods, who has admitted to infidelity in his marriage.

Accenture estimated net revenue of $5.1 billion to $5.3 billion in its fiscal second quarter. Analysts expected $5.4 billion, according to Thomson Reuters I/B/E/S.


The company's shares fell 2.7 percent after closing at $41.66 on Thursday. They had risen around 15 percent over the past three months on hopes that companies were beginning to boost spending on technology and consulting projects.

Accenture specializes in consulting, technology services and outsourcing, helping companies find ways to improve operations and cut costs.

Chief Executive William Green cited recovery in some parts of the business, especially its consulting business where bookings in the first quarter totaled $3.5 billion, the highest in the past four quarters.


But he also said customers were still limiting their spending to smaller projects.

"People are still putting their foot in the water, up to their ankles, up to their knees," he told analysts on a conference call.

"They are doing rationalization, they are doing all kinds of things but that billion dollar transformational thing that you see, those are a lot harder to come by. We do see a higher volume of smaller things."


For the fiscal first quarter ended Nov. 30, revenue fell to $5.4 billion from $6.0 billion, roughly in line with Wall Street estimates.

Net profit for the quarter fell to $444.8 million, or 67 cents a share, from $479.9 million, or 74 cents a share, in the year-ago period. That was higher than the average Wall Street forecast of 65 cents a share.

The company raised its full-year earnings estimate to $2.67 to $2.75 a share, reflecting foreign exchange rates, compared with a previous outlook of $2.64 to $2.72.


Green said, however, that he expected business to pick up in the latter half of the fiscal year, noting that customers were beginning to make longer-term investments.

"I would say for the last 6 to 12 months, people were looking for near-term improvements. They wanted to make improvements in May and have them yield by November," he said. "What we're seeing is people taking a longer term view. People are making investments that will pay off in the 2 to 3 years."

Janney Montgomery Scott analyst Joseph Foresi kept a "buy" rating, saying the company's results and outlook for the current quarter were not a surprise considering economic conditions, and that many customers may set spending plans in January.


"Typically you enter a calendar year, and that's when budgets are finalized," he said. "I was actually positively surprised by the strong bookings in the consulting business."

Green also took an optimistic view on the company's decision on Woods, who was the face of Accenture for six years.

"It's easy to sit there and say woe is me. Instead we're changing this into an opportunity and saying, 'let's just not put a patch on the boat. Let's design a new boat'," he told Reuters.