* Raises 2013 revenue forecast to at least $8.74 bln vs prev
* Raises 2013 EPS forecast to at least $3.96 vs prev $3.95
* Second-quarter earnings $0.99/share vs est $0.97
* Revenue $2.16 bln vs est $2.13 bln
* Shares rise 2.6 percent
By Sruthi Ramakrishnan
Aug 6 Cognizant Technology Solutions Corp
reported better-than-expected quarterly results and
raised its forecast for the year as clients in North America
invest more in IT services and software, encouraged by a steady
Companies cut back on discretionary IT spending, delayed
deals and signed fewer large contracts for most of last year.
But strong quarterly results from Cognizant and its Indian
rivals, Tata Consultancy Services Ltd, Infosys Ltd
and Wipro Ltd , suggest that
corporate technology spending is back.
"It feels like the good old days," Citi Research analyst
Ashwin Shirvaikar wrote in a note.
Cognizant said revenue from North America rose 17 percent to
$1.68 billion in the second quarter as customers increased
budgets and cut costs in other parts of their businesses.
Revenue from its much smaller continental European business
soared 54 percent to $153.4 million.
Instability in Europe has forced companies in the region to
outsource and cut costs. But Cognizant, which operates on lower
margins than its rivals, has been able to win a larger share of
"We saw it (discretionary spending) start at the end of Q1
and clearly continued into Q2," Cognizant President Gordon
Coburn said on a conference call with analysts.
"And based on what customers are telling us, the pipeline
deals that are happening, we think that continues for the
remainder of the year."
Cognizant won several large deals in the second quarter,
including an IT infrastructure outsourcing contract with
Norway's consumer brands company Orkla.
The company defines large deals as those worth tens of
million of dollars in total contract value, McLoughlin said.
Tata Consultancy Services, Infosys and Wipro reported strong
results and gave better-than-expected forecasts last month.
Teaneck, New Jersey-based Cognizant, which has most of its
employees in India, said it expects 2013 earnings of at least
$3.96 per share on revenue growth of at least 19 percent to
It had previously forecast earnings of at least $3.95 per
share on revenue growth of at least 17 percent to $8.60 billion.
The National Association of Software and Services Companies,
the $108 billion Indian IT sector's industry lobby group, has
forecast exports growth of about 12-14 percent for this
Cognizant's net income rose to $300.4 million, or 99 cents
per share, in the second quarter from $251.9 million, or 82
cents per share, a year earlier.
Excluding items, earnings were $1.07 per share.
Revenue rose 20.4 percent to $2.16 billion.
Analysts on average had expected earnings of 97 cents per
share on revenue of $2.13 billion, according to Thomson Reuters
Cognizant shares rose 2.6 percent to $75.29 in late morning
trade on the Nasdaq on Tuesday.