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Higher European demand boosts Cognizant revenue

Wed May 8, 2013 7:05am EDT

(Reuters) - Cognizant Technology Solutions Corp (CTSH.O) forecast current-quarter revenue above market expectations after an 18 percent rise in the first quarter, helped by strong demand from Europe.

Shares of the IT services provider rose 6 percent in premarket trading.

First-quarter sales from Europe rose 23 percent, outpacing a 16 percent growth in North America.

Instability in Europe has forced companies there to outsource and cut costs. But Cognizant has been able to win a larger share of the business by accepting lower margins than rivals.

Europe accounts for nearly a fifth of Cognizant's revenue.

Indian rivals such as Tata Consultancy Services (TCS.NS), Infosys Ltd (INFY.NS) and Wipro Ltd (WIPR.NS) reported mixed results for the first quarter, highlighting a shaky recovery in client demand.

Cognizant, which was founded in 1994 as a captive unit of Dun & Brad Street (DNB.N) in India, forecast revenue of at least $2.13 billion for the second quarter.

Analysts on average were expecting revenue of $2.11 billion, according to Thomson Reuters I/B/E/S.

Cognizant forecast earnings of 97 cents per share, in line with analysts' estimates.

First-quarter net income rose 18 percent to $284.2 million, or 93 cents per share. Revenue rose to $2.02 billion from $1.71 billion.

Analysts on average had expected earnings of 93 cents per share on revenue of $2.01 billion.

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

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