Accenture (NYSE: ACN) tried hard to accentuate the positives in its fiscal-2009 fourth-quarter results, but there's no denying that business remains challenging for the consulting, IT services, and outsourcing provider.
Net revenue for the quarter was $5.15 billion, down 14% in dollars and 7% in local currency. Stripping out a restructuring charge, earnings per share were $0.63, a moderate 6% decrease from the year-ago $0.67.
In revenue terms, Accenture's outsourcing business held up better than the consulting arm. The relative weakness in consulting could owe to a combination of pricing concessions and lower volumes, as businesses focus more on cost savings than planning and implementing major projects.
Full-year results were a tad better. Net revenue slipped 8% in dollars, from $23.4 billion to $21.6 billion, but showed no change in local currency. Again adjusting for the restructuring charge, Accenture managed to eke out 1% annual EPS growth, helped by a lower share count and tax rate.
Meanwhile, new bookings for the fiscal year also came in soft, reflecting ongoing weakness in consulting. Management predicted current-year revenue growth somewhere between negative 3% and positive 1% in local currency -- slightly below analyst estimates -- along with modest growth in new bookings. The company is "assuming" that economic conditions and the business environment both tick upward in the second half of the fiscal year.
All considered, I'd say Accenture is holding its own, even as growth remains questionable. Shareholders can cheer a 50% increase in the dividend and an additional $4 billion in potential share buybacks, following a recent $1.9 billion in repurchases. Given the uncertain macro environment, that looks like the most prudent and shareholder-friendly use of cash, compared to acquisition and expansion maneuvers.
For investors who want exposure to the IT and consulting industry, Accenture boasts additional qualities that make it one of the safer choices. The stock's current-year P/E of 14.1 provides more downside cushion than shares of Indian outsourcers Infosys (Nasdaq: INFY) and Wipro (NYSE: WIT), which trade at current-year P/Es of 23.5 and 31.6, respectively. And when it comes to securing large, multiyear deals, Accenture enjoys the role of the incumbent, rather than the challenger.
Still, with Dell (Nasdaq: DELL) buying IT and consulting provider Perot Systems (NYSE: PER), and Xerox (NYSE: XRX) absorbing Affiliated Computer Services (NYSE: ACS), competition seems to be heating up in the industry. So long as the economy is hobbled, that could mean further downward pressure on pricing.
I'm not wildly enthusiastic about the industry's near-term prospects. However, if things get so bad that the consultants need consultants, Accenture should hold up better than most.
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