Cognizant Boosts Profit View on Financial Services Growth
Cognizant Technology Solutions Corp. (CTSH), a provider of consulting and outsourcing services, reported third-quarter profit that topped analysts’ estimates and boosted its earnings per share forecast for 2012.
Cognizant, which counts Bank of America Corp. (BAC) and UBS AG. (UBSN) as customers, is gaining clients seeking to outsource tasks to low-cost nations amid a slower global economy. Financial- services revenue grew 7 percent in the third quarter from the prior period on increased business from the company’s largest banking clients in Europe and the U.S., Gordon Coburn, Cognizant’s president, said in an interview today.
Chief information officers are relying on the Teaneck, New Jersey-based company to simultaneously reduce costs and invest in innovation, Coburn said.
“As long as clients understand the playing field and are able to make decisions, we do well,” Coburn said. “Right now, clients understand the playing field and are moving forward with their businesses, and we become a very important piece of that puzzle.”
Profit for 2012 will be as much as $3.42 a share, up from a prior forecast of $3.38, according to a statement today. Analysts on average had estimated $3.39, according to data compiled by Bloomberg.
Third-quarter net income rose to $276.9 million, or 91 cents a share, from $227.1 million, or 73 cents, a year earlier. Analysts predicted 87 cents a share.
Revenue in the third quarter was $1.89 billion, topping analysts’ estimates for $1.88 billion. Newer consulting, business-process outsourcing and technology infrastructure services comprised 20 percent of third-quarter sales, according to the statement.
Cognizant didn’t see any deferment of sales or operational decisions due to uncertainty from the U.S. election, Coburn said, although increased clarity on regulatory decisions may help drive business from certain clients.
The company still has “gaps in its portfolio” in France and Germany and is searching for acquisitions in the region, Coburn said. The company is primarily looking at targets with between $20 million and $80 million in revenue, he said.
“Those are countries where you need a strong local presence due to cultural and language issues,” he said.
The shares fell 0.6 percent to $66.94 at the close in New York amid a broad market decline that sent the Standard & Poor’s 500 Index down 2.4 percent, the benchmark’s biggest one-day decline since June. Cognizant has gained 4.1 percent this year.
To contact the reporter on this story: Alex Sherman in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Turner at email@example.com