Accenture keeping eye on trends

Date: 20-12-2007
Source: Dow Jones Newswires

Accenture Ltd. (ACN) reported robust first-quarter results Wednesday, but is keeping a "close eye" on the global economic trends amid concerns of a slowdown in the U.S. economy, a senior company executive said Wednesday.

"We are keeping a close eye on the global economic trends, developments in the capital markets and other issues which may affect our business," William D. Green, chairman & chief executive, said at a conference call after the company reported its first quarter numbers.

"Despite challenges in some sectors of the economy, demand for our services continues to be robust and we see tremendous opportunities to assist clients".

As a result, the Hamilton, Bermuda-registered management consulting, technology services and outsourcing firm earlier in the day raised its guidance for fiscal-2008 earnings by 15 cents a share, to a range of $2.36 to $2.41 a share and affirmed its earlier prediction of net revenue growth of 9% to 12% in local currency.

The guidance revision comes on the back of the company posting fiscal first-quarter net income at $381.3 million, or 60 cents a share, up 34% from $284.2 million, or 46 cents a share, a year earlier, on net revenue of $5.67 million, up 19% on year.

The strong results and the raised outlook pushed the stock up 4.3% to $36.45 in after-hours trading.

The company also managed to keep its quarterly operating margins flat at 12.8% despite an average over 10% pay hike to its employees in September, by charging clients higher prices and driving down costs, Pamela J. Craig, chief financial officer, told Dow Jones Newswires.

She expects the company to post operating margins in the 12.8% to 13.1% range in the current fiscal year.

Chief Operating Officer Stephen J. Rohleder said that Accenture had the scope to "drive down" its cost of sales further. "I think it's safe to say that we have some inefficiencies there that I think we can improve on," he said.

Selling, general & administration costs for the quarter were at 17.1% of net revenues, compared with 17.2% of net revenues for the first quarter last year. Separately, talking about trends in outsourcing deal sizes, Green said the size and time span of deals have been getting shorter. "Gone are the days when people would be just waiting for a billion dollar deal to come by. No companies take smaller bites," said Green. He said that worked to benefit of companies such as Accenture as they could now have more diversity in their portfolios.