Ahead of the Bell: Accenture shares climb

Despite dropping sales, Accenture Ltd. performed well in a tough environment during its third quarter, analysts said.

Accenture on Thursday reported third-quarter earnings above Wall Street estimates, and the consultancy and outsourcing company raised its profit forecast for the year. It didn't offer guidance for 2010.

Shares rose 4.9 percent, or $1.55, to $33.19 in premarket trading.

Thomas Weisel analyst David Grossman said in a note to investors that investors were reassured by the stability in project bookings. Consulting bookings were $3.2 billion, up from $3.15 billion in the second quarter, while outsourcing bookings were very strong, he said. Total bookings were $6.57 billion, up 10 percent from last year minus foreign exchange fluctuations.

Accenture said its profit was $444 million, or 68 cents per share, compared to $469.1 million, or 74 cents a share a year before. Revenue fell 16 percent to $5.54 billion.

Analysts surveyed by Thomson Reuters had, on average, expected profit of 64 cents a share on revenue of $5.2 billion.

Accenture also said it expects profit for the year to be between $2.67 and $2.70 per share, compared to its previous estimate of between $2.60 and $2.67.

Deutsche Bank analyst Tim Fox said that despite continued pressure on revenue, the company is managing costs well. He cited higher use of off-shore labor and standardized delivery platforms in its outsourcing business.

He raised profit estimates for the year ending Aug. 31 to $2.68 from $2.63, as did Grossman.

Wall Street analysts expect 2009 profit of $2.64 per share.

However, Stifel Nicolaus analyst George Price said Friday in a note to investors he thinks conditions at Accenture are getting worse, not better. Demand for high-end consulting dropped compared to the prior quarter, and pressure on pricing worsened, he said. Fox also noted that the company is having to restructure existing deals for distressed clients.

Price cut his estimates for 2010 to profit of $2.72 per share from $2.85. Wall Street analysts expect profit of $2.76 per share.