Cognizant cuts FY outlook; profit beats estimates

May 07, 2012 |

Reuters

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Information technology services provider Cognizant Technology Solutions Corp lowered its forecast for the full year on low demand, echoing the bleak outlook given by most of its rivals.

Cognizant shares were down 8 percent at $64 before markets opened on Monday. They had closed at $69.66 on Friday on the Nasdaq.

"Due to a slower than anticipated acceleration in demand ... we are adopting a more conservative stance," Cognizant Chief Executive Francisco D'Souza said in a statement.

The company said it now expects an adjusted earnings of $3.62 per share on revenue of at least $7.34 billion for 2012 - down from its previous forecast of $3.69 per share in adjusted earnings on revenue of $7.53 billion.

Analysts had been expecting the company to raise its full-year outlook.

"The management could adjust up its 'at least' 23 percent revenue growth guidance for FY12 slightly," Needham analyst Mayank Tandon had written in a note dated May 4.

Indian rivals Wipro Ltd and Infosys Ltd forecast muted revenue growths last month, highlighting the turbulence software exporters face due to an uncertain global economy.

However, India's top software services exporter, Tata Consultancy Services Ltd, said it expects to outperform the sector outlook - an indication that it is poised to gain at the expense of rival Infosys.

In January, market research firm Gartner cut its forecast for worldwide IT spending growth this year to 3.7 percent from 4.6 percent it estimated earlier, citing a faltering global economic growth, the euro zone crisis and the impact of Thailand's floods on hard-disk drive production.

Cognizant said it expects adjusted earnings of 87 cents per share on revenue of at least $1.79 billion for the second quarter.

Analysts on average had been expecting earnings of 83 cents per share on revenue of $1.84 billion, according to Thomson Reuters I/B/E/S.

Net income for the first quarter rose to $243.6 million, or 79 cents per share, from $208.3 million, or 67 cents per share, a year ago.

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