* Expects 2014 revenue of at least $10.3 bln vs est $10.38
* 4th-qtr profit/shr and revenue in line with estimates
* Shares fall as much as 7 pct
By Sruthi Ramakrishnan
Feb 5 Cognizant Technology Solutions Corp
forecast 2014 revenue below analysts' expectations,
raising concerns that the IT services provider's scorching
growth may be cooling off.
Shares of Cognizant, which reported fourth-quarter results
in line with analysts' average estimates, fell as much as 7
percent in morning trading on Wednesday.
The company, which also declared a 2-for-1 stock split, said
it expected revenue to grow at least 16.5 percent this year, the
slowest growth since 2009 and lower than the 20.4 percent growth
Analysts on average were expecting Cognizant to grow revenue
by 17-20 percent in 2014 due to higher demand from Europe and
for healthcare services.
William Blair & Co analyst Rahul Bhangare said some
investors might be "a little bit disappointed and scared" that
the company's growth was slowing.
"The Street was getting a bit too aggressive. If you look at
the guidance that the company has historically given at this
point in the year, it is typically conservative," Bhangare told
Teaneck, New Jersey-based Cognizant had forecast 17 percent
revenue growth for last year.
The company, which has most of its employees in India, said
demand was picking up in Europe, helped by its acquisitions of
France-based Equinox Consulting last year and six companies from
Germany-based C1 Group in 2012.
"A lot of the performance that we saw in 2013 was driven by
discretionary spending that picked up in the middle of the year,
and we expect to see a continuation of that going into 2014,"
CEO Francisco D'Souza said on a conference call, which was
briefly interrupted due to technical difficulties caused by a
snowstorm around the U.S. East Coast.
India's top IT services provider, Tata Consultancy Services
Ltd, said last month it expected sales growth to
accelerate in its financial year ending March 2015.
Infosys Ltd lifted its sales growth
outlook for this fiscal year on signs of an economic revival in
the United States and Europe.
Cognizant's net income rose to $324.3 million, or $1.06 per
share, in the fourth quarter ended Dec. 31, from $278.8 million,
or 92 cents per share, a year earlier.
Revenue rose 21 percent to $2.36 billion, helped by a 22.1
percent rise in revenue from its financial services business.
Analysts on average had expected the company to earn $1.06
per share on revenue of $2.36 billion, according to Thomson
"Some people may have been very disappointed with the Q4
(fourth-quarter) results, they were largely in line and this is
not necessarily typical of Cognizant just to be in line,"
analyst Bhangare said.
The company forecast revenue of at least $10.3 billion in
fiscal 2014, lower than the analysts' average estimate of $10.38
Cognizant's shares, after dropping to a low of $89.91, were
at $92.03 in late-morning trading on the Nasdaq.