Accenture Ltd., a technology consulting firm, on Tuesday said its quarterly profit rose 37 percent, helped by a one-time gain and strong sales of contract services to other companies, but said current quarter profit could miss analysts' estimates.
Accenture, whose stock fell 3 percent in pre-market trading, said fiscal second-quarter profit would meet or fall as much as 6 cents below analysts' average estimates.
The Bermuda-based company also reported $5.05 billion in new bookings, its third largest ever, 60 percent of which comes from outsourcing, or providing contract services to other companies. Currently, two-thirds of revenue comes from consulting.
Accenture, which has made a big push into the fast growing but less profitable field of outsourced services, said margins slid due to the high start-up costs of consulting contracts and pricing pressure. Analysts say pricing is likely to remain depressed -- even though technology spending has started to rebound -- because of greater competition from Indian vendors.
For the fiscal first quarter ended Nov. 30, net income rose to $174.3 million, or 33 cents a share, from $126.9 million, or 27 cents a share, a year earlier. Results benefited from lower reorganization costs tied to its transition from a partnership to a public company in 2001.
Profit would have been 27 cents a share excluding the 6 cents a share benefit, slightly lower than analysts' average estimate of 28 cents a share, according to Reuters Research, a unit of Reuters Group Plc.
Revenue, before client reimbursements to cover travel and other consultant expenses, rose to $3.26 billion from $2.93 billion, a year earlier. Outsourcing sales surged 45 percent while consulting revenue fell 1 percent in constant currency.
Gross margin, gross profit as a percentage of net revenues, declined to 34.1 percent in the first quarter from 39.4 percent a year ago, as it continues to shift its business mix toward outsourcing.
Accenture Chief Executive Joe Forehand said in a release that he is encouraged by signs of economic recovery in many parts of the world and is pleased with its strong new bookings, particularly in the outsourcing arena.
Analysts see Accenture as a long-term growth story. "We see continued revenue growth, bookings appear to be very strong," said David Garrity, an analyst with American Technology Research.
The company said second-quarter earnings should range from 21 cents to 27 cents a share on revenue of $3.10 billion to $3.25 billion. That compares with analysts' average estimate of 27 cents a share on revenue of $3.06 billion.
Accenture also expects to record a real-estate consolidation charge of $75 million to $100 million in the quarter.
For the year, it expects net revenue growth to range from 8 percent to 12 percent. The company said it was not ready to provide guidance for fiscal 2004 earnings per share.