(UPDATES with comments from conference call.)
Accenture Ltd. (ACN) said on Thursday its fiscal fourth-quarter
profit slid 41% on restructuring charges and lower revenue. But the
company's chief executive said it was "benefiting" from recent
consolidation in the IT service industry.
Accenture also issued weak fiscal first-quarter and full-year
targets, helping to send its stock down 2.7% after-hours to
$35.55.
The technology outsourcing and management company has trimmed
its work force twice this year and has cut excess real estate
capacity. Hopes the recession would boost demand for outsourcing
has failed to materialize.
On a conference call to discuss its results, Accenture
executives said the company benefits from a wave of IT services
company consolidation. In the past few weeks, Dell Inc. (DELL) bid
$3.9 billion for Perot Systems Corp. (PER), while Xerox Corp. (XRX)
bid $6.4 billion for Affiliated Computer Services Inc. (ACS).
Accenture Chief Executive William Green warned his new
competitors, who are looking to expand beyond their core businesses
of selling IT hardware, that it is difficult to simply bolt on
services.
"Assembling services companies never works," Green said during
the call. "It's a rough ride."
Green added the company was investing in high-growth areas to
position itself for an eventual upturn.
Accenture projected fiscal first-quarter net revenue of $5.3
billion to $5.5 billion, below Wall Street's view of $5.55 billion,
according to a survey of analysts by Thomson Reuters.
For the year, Accenture sees per-share earnings of $2.64 to
$2.72 and revenue ranging from down 3% to up 1%. Analysts expected
per-share earnings of $2.77 on revenue of $21.99 billion, or up
2%.
For the quarter ended Aug. 31, Accenture reported earnings of
$254.7 million, or 39 cents a share, down from $434.8 million, or
67 cents a share, a year earlier. The latest results included a
previously disclosed restructuring charge of 24 cents. Analysts
surveyed by Thomson Reuters predicted per-share earnings, excluding
items, of 63 cents.
Revenue dropped 16% to $5.51 billion. Net revenue, or revenue
before reimbursements, slid 14% to $5.15 billion. In August, the
company affirmed its net revenue target of $5 billion to $5.2
billion.
Gross margin rose to 32.3% from 31.7% on improved outsourcing
contract margins. On Tuesday, Citigroup said recent restructuring
actions would help boost margins. The firm said Accenture's India
and business process outsourcing investments, along with a lower
tax rate, would contribute to longer-term margin growth.
Consulting revenue decreased 19%, while outsourcing revenue
declined 7%. In local currencies, the figures fell 12% and rose 1%,
respectively. Net revenue in the Europe, Middle East, Africa region
fell 20%, but rose 1% in the Asia Pacific.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com
(Ben Charny contributed to this article.)