Cognizant Q2 profit rises; cuts 2008 outlook

CIOL Bureau
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BANGALORE, INDIA: Cognizant Technology Solutions Corp today reported a quarterly profit in line with analysts' expectations, but the information technology service provider lowered its 2008 outlook.

The company expects slower growth in its payer segment of healthcare for the rest of the year as it sees one of its top five clients scaling back spending "significantly," CEO Francisco D'Souza said in a conference call with analysts

For the third quarter, the company, whose clients include Aetna Inc and Molina Healthcare, expects earnings of 37 cents a share, on revenue of $723 million. Excluding items, it expects to earn 41 cents a share.

Analysts were expecting earnings of 38 cents a share, before items, on revenue of $744.1 million.

For 2008, the company expects to earn $1.44 a share, on revenue of $2.81 billion. It had previously forecast a profit of $1.50 a share, on revenue of $2.95 billion.

Excluding items, it now expects to earn $1.61 a share, down from its previous forecast of $1.67.

Cognizant posted second-quarter earnings of $103.9 million, or 35 cents a share, compared with earnings of $82.3 million, or 27 cents a share, in the year-ago period.

Excluding stock-based compensation and stock-based Indian fringe benefit tax expenses, the company earned 39 cents a share.

Revenue rose 33 per cent to $685.4 million.

Analysts on average were expecting earnings of 35 cents a share, including stock-based compensation expense but excluding special items, on revenue of $683.4 million, according to Reuters Estimates.

For the second quarter, a better-than-expected growth in the financial services was offset by a weak healthcare segment, which grew only 3 per cent sequentially, D'Souza said in the call.

Shares of Cognizant fell to $27.50 in trading after the bell. They closed at $28.07 Thursday on the Nasdaq.