Cognizant Pips Infosys, Raises F'cast

Cognizant Technology Solutions has managed to overtake Infosys as the second largest Indian IT software services in revenue terms, after TCS, as it reported better-than-expected profit in the second quarter on  increased demand for its outsourcing services. The information technology services provider also raised its full-year adjusted profit forecast.

The company now expects full-year adjusted earnings of at least $3.64 per share, up from its previous forecast of $3.62 per share. It reaffirmed its revenue forecast of at least $7.34 billion.

Analysts on average were expecting full-year earnings of $3.37 per share on revenue of $7.34 billion, according to Thomson Reuters I/B/E/S.

It reaffirmed its revenue forecast for 2012  of at least $7.34 billion, up 20 per cent against last year. Reuters

The outlook for IT services companies has been mixed at best. Indian outsourcing heavyweights Infosys Ltd and Wipro Ltd had forecast weak sales, citing slowing global outsourcing spend, while others like Capgemini raised growth targets.

Cognizant's net income rose to $251.9 million, or 82 cents per share, for the second quarter from $208 million, or 67 cents per share, a year earlier.

Excluding items, the company, which also competes with Accenture Plc and Computer Sciences Corp, earned 88 cents per share.

Revenue rose 21 per cent to $1.8 billion.

Analysts on average had expected earnings of 80 cents per share on revenue of $1.79 billion.

“We are pleased to maintain our full-year revenue guidance as we continue to execute as we expected,” said Karen McLoughlin, Cognizant’s Chief Financial Officer. “Our reaffirmed full-year revenue guidance includes absorbing more than $20 million of negative currency impacts during quarters two through four as a result of currency movements since we last provided guidance in early May.  In addition, we repurchased over $358 million of shares during the second quarter, reflecting our strong cash flow and confidence in the strength of our business.”

If Cognizant manages to meet its guidance for the full year, Cognizant and Infosys will be locked for the second spot in terms of dollar revenues for the full year too as Infosys sees its revenue in dollar terms rising 5 percent  to $7.34 billion in the year to March 2013

Cognizant shares have fallen about 20 per cent since May 7 when it lowered its full-year forecast for the first time in nearly four years. They were set to open 3.7 percent higher on Monday after closing at $57.86 on Friday on the Nasdaq.