RPT-PREVIEW-Accenture seen recovering, unruffled by rivals' M&A

(Repeats story issued Sept. 29)

* Market sees FY'10 EPS excl. items $2.77, FY'09 $2.68

* Analysts expect Accenture to highlight recovery

* Company seen withstanding small rivals' M&A

By Ritsuko Ando

NEW YORK, Sept 29 (Reuters) - Accenture Plc (ACN.N) is expected to give an upbeat outlook on Thursday and highlight a recovery in its consulting and outsourcing business, which analysts say is strong enough to withstand competition from rivals bulking up through mergers.

Xerox Corp (XRX.N) on Monday announced a deal for outsourcing business Affiliated Computer Services Inc (ACS.N), a week after Dell Inc (DELL.O) said it would buy Perot Systems Corp (PER.N), another technology services provider.

Analysts said these deals validate, rather than threaten, Accenture's business as they follow the trend of large hardware vendors like International Business Machines Corp (IBM.N) and Hewlett-Packard Co (HPQ.N) boosting their investments in higher-margin services.

With over $25 billion in market capitalization, Accenture is too big for most companies to swallow, analysts said, though some did not rule out a bid some day by a large technology firm like IBM, which offers some of the same services, or Cisco Systems Inc (CSCO.O), which does not.

"Companies are trying to get into the area that Accenture already has a very strong foothold in. We think it has a strong incumbent position," said Edward Jones analyst Andy Miedler. He was upbeat about Accenture's growth outlook and said it was unlikely to feel pressure to consolidate.

Accenture specializes in consulting, technology services and outsourcing, helping companies find ways to improve their operations and cut costs.

Because the economic downturn has forced companies to look for ways to cut costs, Accenture has managed to escape the worst effects of the recession.

Wall Street expects the company's fiscal fourth quarter results to show earnings of 63 cents per share excluding items, compared with 67 cents a year ago, with revenue falling 14 percent to $5.1 billion, according to Reuters Estimates.

Despite the year-on-year decline, such results would indicate more stability compared to the third quarter, and analysts said upbeat forecasts for the new year that began Sept. 1 would confirm expectations that the worst of the downturn is over for Accenture.

Analysts forecast a rise in 2010 earnings, excluding items, to $2.77 from $2.68 in 2009.

GOOD VALUE

Kaufman Bros. analyst Karl Keirstead said the wave of mergers in the services sector "shine a spotlight on the value of service offerings that Accenture has already built up."

"I don't think they force any change, and I don't think Accenture needs to scale up its business via acquisitions," Keirstead said. "In terms of taking over back office, in business process outsourcing, Accenture is already a top player. In terms of consulting services of figuring out how to integrate various pieces of IT, Accenture's No. 1."

He has a $41 target on the shares, which were trading at $37.34 on Tuesday.

Keirstead said Accenture was too large for anyone to acquire now, although he said Accenture could pick up smaller companies to expand its portfolio of services.

He and other analysts said the flurry of deals also highlighted how attractive Accenture shares were. They are trading at around 13 times average earnings forecasts for 2010, lower than some peers' multiples. Perot has been trading close to 30 times earnings since it announced the Xerox deal.

"Now is a good time for long-term investors," Miedler said.

While merged rivals and large companies like IBM have the advantage of offering a combination of hardware, software and services, Miedler saw strength in Accenture's ability to work with any technology vendor.

"I think they're a very good independent provider that's agnostic to the brand of technology," he said.

(Reporting by Ritsuko Ando; Editing by Richard Chang)