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Rediff.com  » Business » Accenture cuts full-year outlook as consulting slows further

Accenture cuts full-year outlook as consulting slows further

June 28, 2013 11:04 IST

Accenture cuts full-year outlook as consulting slows further

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Sruthi Ramakrishnan in Bangalore

Outsourcing and consulting services provider Accenture Plc cut its full-year outlook, citing a pullback in spending by its consulting business clients, after reporting third-quarter revenue below analysts' estimates.

Shares of Accenture, whose clients include London's Heathrow Airport, Nokia Oyj, Baker Hughes Inc and AstraZeneca UK, were down 7 per cent at $74.60 in extended trading on Thursday.

Clients were slowing the pace and level of spending on existing contracts, said Accenture, whose rivals include Cognizant Technology Solutions Corp and Infosys Ltd.

The company expects outsourcing revenue to moderate, and consulting revenue to decline modestly or grow slightly in the current quarter, Chief Financial Officer David Roland said on a conference call with analysts.

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Image: Visitors look at devices at Accenture stand at the Mobile World Congress.
Photographs: Albert Gea/Reuters

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Accenture cuts full-year outlook as consulting slows further

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Accenture now expects adjusted earnings of $4.18 to $4.22 per share on revenue growth of 3 to 4 per cent in local currency for the year ending August 31.

The company in March had forecast adjusted annual earnings of $4.24 to $4.32 per share on a revenue growth rate below the midpoint of the 5-8 per cent range it previously expected in local currency.

The outlook assumed a negative currency impact of 1.7 per cent, compared with a negative impact of 1 per cent expected earlier.

While there has been moderate improvement in discretionary spend in 2013, there was still softness in the consulting segment, particularly in Europe, Barclays analyst Darrin Peller wrote in a note.

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Photographs: Matt Sullivan/Reuters

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Accenture cuts full-year outlook as consulting slows further

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Accenture's consulting net revenue dropped 2 per cent to $3.9 billion in the three months ended May 31. Revenue from the business, which Accenture expected to return to growth, fell for the fourth straight quarter.

Consulting bookings were almost $400 million lower than the company expected. Smaller contracts, which convert to revenue faster, declined.

"It (consulting) definitely didn't improve the way we expected and we see more softness in that part of the business in consulting smaller deals," Accenture Chief Executive Pierre Nanterme said on the call.

Outsourcing net revenue rose 4 per cent to $3.3 billion in the quarter.

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Image: Accenture Chief Executive Pierre Nanterme.
Photographs: Charles Platiau/Reuters

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Accenture cuts full-year outlook as consulting slows further

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Accenture's results could have been worse without the strength in outsourcing, Edward Jones technology analyst Josh Olson told Reuters.

Net revenue rose 0.6 per cent to $7.2 billion.

Net income rose to $874.1 million, or $1.21 per share, in the third quarter, from $762.8 million, or $1.03 per share, a year earlier.

Excluding items, the company earned $1.14 per share.

Analysts on average had expected earnings of $1.13 per share on revenue of $7.42 billion, according to Thomson Reuters I/B/E/S.

Accenture shares closed at $80.22 on the New York Stock Exchange on Thursday.


Photographs: Reuters

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