Accenture qtly profit falls 10%

CIOL Bureau
New Update

NEW YORK: Accenture Ltd., the world's largest consulting firm, has said its quarterly profits fell more than 10 percent, dragged down by a charge for consolidating excess office space amid a brutal consulting climate.

However, the company said it would meet earnings and revenue targets for the current fiscal year, reassuring jittery investors after a rocky summer for consultants. Investors dumped shares of consulting firms after computer services giant Electronic Data Systems Corp. issued a mammoth profit warning last month, citing a virtual stop in technology spending by customers.

"The fact that they reiterated guidance should make investors feel very comfortable with the story," UBS Warburg analyst Adam Frisch said. "People are just looking for basic execution here." Specifically, the company said it expected to report earnings of $1.05 a share in fiscal 2003, assuming revenue growth that ranged from flat to an increase of 2 percent.

For the fiscal Q4 ended Aug. 31, the Bermuda company reported its net profit dropped to $38.1 million, or eight cents a share, from $42.7 million, or 10 cents a share, a year earlier. Excluding investment losses and a $111 million charge for shrinking office space around the world in a bid to cut costs, Accenture reported a profit of 16 cents a share.

On that basis, analysts on average expected the firm to post a profit of 16 cents a share in the fourth quarter, according to research firm Thomson First Call.

Net revenues for the quarter slipped three percent to $2.69 billion. Faced with reluctance by clients to spend on big-ticket technology and management consulting projects during the economic downturn, the company has moved aggressively to cuts costs by slashing jobs and pay for its partners.

In the fourth quarter alone, the company said it recorded $125 million in costs to realign its workforce. It also slashed annual bonuses and other compensation for partners by $140 million. Accenture shares, which have largely been on a downward trend since April as investors fretted about the prolonged downturn in the consulting sector, closed at $12.46 on the New York Stock Exchange on Wednesday. They have dropped more than 53 percent since the start of the year, underperforming the broader S&P 500 index, which has dropped more than 32 percent in the same period.

© Reuters