Investment losses drag down Accenture in Q2

IT services provider Accenture saw its net income drop substantially in its second fiscal quarter due to investment losses.

Net income for the second quarter ended Feb. 28, 2002, fell to US$10.6 million, or $0.02 per diluted share, down from pro forma net income of $80.9 million, or $0.20 per diluted share, in the same fiscal quarter last year, the company said in a statement Thursday.

The drop in net income is due primarily to a charge of $212 million the company took in the second quarter in investment losses. Accenture last month announced plans to sell most its venture and investment portfolio to reduce future earnings' volatility.

Revenue rose 1 percent to $2.91 billion in 2002's second fiscal quarter, compared with the same quarter in fiscal 2001.

Net income before subtracting the investment loss and minority interest came in at $236 million, or $0.23 per diluted share. That exceeded by a penny the consensus from analysts polled by Thomson Financial/First Call, which excluded the investment and minority interest items. Minority interest refers to the income from subsidiary Accenture SCA that can't be claimed by Accenture Ltd. shareholders because Accenture SCA isn't wholly owned by Accenture Ltd.

In last fiscal year's second quarter, Accenture had pro forma net income before investment losses and minority interest of $216 million, or $0.21 per diluted share, the company said.

Accenture expects to post earnings of $0.26 per share in the third quarter ending May 31, 2002.

Accenture's results for the first two fiscal quarters of 2001 are rendered in pro forma fashion, instead of as actual results, because at the time the company operated as a series of related partnerships and corporations under the control of its partners.

The company officially switched to a corporate structure when it went public on July 19, 2001. Thus, results for the first six months of fiscal 2001, ended Feb. 28, 2001, have been adjusted according to GAAP (generally accepted accounting principles) to show what the company's results would have been if it had at the time been operating as a public company since Sept. 1, 2000, the company said. The pro forma calculation also reflects the effects of a variety of one-time events related to the company's transition to a corporate structure and initial public offering, including reorganization and rebranding costs.

The company's stock (ACN) was trading at $22.25, down 1.33 percent, at noon on Friday. The stock's 52 week high is $30.50. The stock opened at $23.35 on Thursday, and closed at $22.55.

New York-based Accenture was created as Andersen Consulting in 1989, and since then was operated independently and was managed separately from accounting firm Arthur Andersen LLP, although it kept some contractual links with its former parent company related to the sharing of some buildings and administrative services, an Accenture spokesman said Friday. All remaining links between the companies were severed in August 2000, he added.

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