Accenture beats expectations by slim margin

IT services provider Accenture Ltd. narrowly beat revenue and earnings expectations for the third quarter of its 2002 fiscal year, ended May 31, while stating it continues to face a "challenging" economic climate, the company said in a statement Friday morning.

Accenture reported net income of US$114.4 million, or $0.27 per share, beating by a penny the consensus expectation from 14 analysts polled by Thomson Financial/First Call. Net income rose 9 percent over pro forma net income of $104.8 million in 2001's third fiscal quarter, when earnings per share were $0.25.

"In what continues to be a challenging economic environment around the world, I think we performed well during the quarter; we achieved our bottom-line objectives," said Joe Forehand, Accenture's chairman and chief executive officer, during a conference call Friday to discuss the results.

Accenture's net revenue of $2.98 billion also slightly exceeded consensus expectations of $2.97 billion net revenue from 8 analysts polled by Thomson Financial/First Call. Net revenue rose 1 percent over pro forma net revenue in 2001's third fiscal quarter.

Total revenue, which includes reimbursements, came in at $3.43 billion, down 2 percent from pro forma total revenue of $3.51 billion in the third fiscal quarter of 2001.

Accenture's stock (ACN) was at $15.24 in late-morning trading, down 1.99 percent from Thursday's close. Its highest point in the past 52 weeks was $30.50.

IT services providers have been struggling recently with a slump in demand for their offerings and with a drop in prices caused by intense competition, according to Gartner Inc.'s Dataquest Inc. unit. The IT services market's revenue is expected to grow a tepid 2.8 percent in 2002 over 2001, according to a forecast made by Dataquest in May. Accenture will cut about 1,000 jobs -- about 1.3 percent of its approximately 75,000 employees -- by the end of its 2002 fiscal year on Aug. 31, 2002, an Accenture spokesman said Friday, confirming press reports published earlier this week. The move will affect mostly those "in the manager level and above" in the consulting business in the U.S., the U.K. and Australia, he said. However, the company plans to end fiscal year 2003 with 8,000 more employees than at the end of fiscal year 2002, he added.

Broken down geographically, fiscal 2002 third quarter net revenue stayed flat in the Americas at $1.53 billion, rose 4 percent to $1.26 billion in the Europe, Middle East and Africa (EMEA) region and fell 8 percent in Asia Pacific to $190 million, Accenture said.

Of Accenture's five operating groups, the Government group saw the highest net revenue increase, with a 19 percent hike, followed by the Communications and High Tech group, which posted an 8 percent jump. The Financial Services group fared the worst, with a net revenue drop of 16 percent, which Accenture blamed on "continued weakness" in the capital markets and banking sectors.

Accenture expects earnings per share of $0.16 for the fourth quarter of its 2002 fiscal year. For the entire fiscal year, it expects earnings of $0.65 per share. It expects to finish fiscal year 2003 with earnings per share of $1.05.

Accenture, based in Bermuda, reports its 2001 third-quarter results in a pro forma fashion 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, the 2001 third quarter results are pro forma, instead of actual, because they 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, 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 its initial public offering, including reorganization and rebranding costs.

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