(Adds analysts' comments, details)
By Lehar Maan and Abhirup Roy
June 26 Accenture Plc, a consulting and
outsourcing services provider, cut the top end of its full-year
earnings forecast as margins come under pressure, taking the
shine off a rebound in its consulting business that boosted
Accenture's shares, which have been trading around their
life-high, fell as much as 3.9 percent in volatile trading on
The company said it expects full-year operating margin at
the lower end of its previously forecast range of 14.3-14.5
Analysts have said that Accenture is facing increasing
pricing pressure from rivals such as International Business
Machines and others amid sluggish business spending.
"I think now you are seeing that lower profitability on some
contracts continues to weigh on margins," Atlantic Equities
analyst Christopher Hickey told Reuters.
Accenture said it now expects full-year earnings to be in
the range of $4.50-$4.54 per share, compared with $4.50-$4.62
Analysts on average were expecting earnings of $4.53 for the
full-year, according to Thomson Reuters I/B/E/S.
The company's total operating expenses for the quarter rose
7.5 percent to $7.06 million.
Accenture reported a better-than-expected 7.5 percent rise
in quarterly net revenue, led by a rebound in demand for its
Hickey said the company was benefiting from its newer
business offerings and several large contracts it had signed
Revenue in the consultancy business rose 5.7 percent in the
third quarter compared with a 1 percent decline in the second
quarter, highlighting a recovery in the unit that accounts for a
little over a half of the company's total net revenue.
Outsourcing revenue rose 9.6 percent, accounting for 48
percent of total net revenue. In the IT outsourcing business, it
competes with India's Infosys Ltd and Tata Consultancy
Accenture forecast revenue of between $7.45 billion and
$7.70 billion for the fourth-quarter. Analysts on average were
expecting $7.56 billion, according to Thomson Reuters I/B/E/S.
"(Accenture) is generally well positioned to capture more
than their fair share of discretionary spending and ongoing cost
reduction spending," Hickey added.
Gartner Inc forecast in April that it expects
worldwide IT spending to total $3.8 trillion in 2014, a 3.2
percent increase from 2013.
Accenture's net income rose to $881.8 million, or $1.26 per
share, in the third quarter ended May 31 from $874.1 million, or
$1.21 per share, a year earlier.
Analysts had expected earnings of $1.21 per share.
Net revenue, or revenue before reimbursements, rose 7.5
percent to $7.74 billion, beating the average analyst estimate
of $7.55 billion.
Accenture's shares fell to a low of $79.77 but pared some of
those losses to trade down 1 percent at $82.13 by mid-day.
(Reporting By Lehar Maan in Bangalore; Editing by Saumyadeb