Outsourcing boosts Accenture, allays Europe concerns

Stock Market Predictions

(Global Markets) - Robust outsourcing revenue helped Accenture Plc (ACN.N) beat Wall Street expectations for the ninth straight quarter, but the company lowered its full-year profit outlook because of a strong dollar.

Investors shrugged off the company's comments that some clients in Europe were cutting or deferring investments in consulting projects, pushing Accenture's shares up 4 percent after the bell.

"We have seen renewed challenges around the debt issue in Europe, as well as confirmation of a slowdown in the forecast for the global economic growth," Chief Executive Pierre Nanterme said on a conference call with analysts.

Europe accounts for 40 percent of the company's total revenue.

Accenture, which competes with Cognizant Technology Solutions Corp (CTSH.O) and India's Infosys Ltd (INFY.NS), remains upbeat about its outsourcing business, especially in China and other emerging markets.

JP Morgan technology analysts recently lowered their forecast for global IT spending growth to 2.2 percent from 3.8 percent for the year.

Rival Cognizant cut its full-year forecast for the first time in nearly four years last month, citing weak demand from financial services clients in North America, echoing sentiments expressed by Infosys and Wipro Ltd (WIPR.NS).

Infosys, which is expected to report first-quarter results on July 12, may lower its fiscal 2013 revenue outlook on weak spending and adverse cross currency movements, according to a Jefferies report.

Accenture now expects a full-year profit of $3.80 to $3.84 per share. It had previously forecast a profit of $3.82 to $3.90 per share.

March-May net income attributable to shareholders rose to $752.4 million, or $1.03 per share, from $692 million, or 93 cents per share, a year earlier.

Shares of the company rose to $58.75 after the bell. They closed at $56.63 on Thursday on the New York Stock Exchange.

The stock has fallen 13 percent since March 26, when it touched a life-high of $65, days after the company reported second-quarter results.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Supriya Kurane)

(This story was corrected in the first paragraph to clarify that the company cut its full-year profit outlook on dollar strength, not weakness in Europe)