Accenture Plc (ACN:US), the world’s second-largest technology-consulting company, tumbled the most in four years after its sales forecast trailed analysts’ estimates.
The stock fell as much as 14 percent to $69 in New York trading, the biggest intraday decline since March 2009. The plunge dragged down stocks of rivals, including International Business Machines Corp.
Accenture is grappling with a change in the behavior of its clients, who in recent quarters have been deferring decisions on short-term contracts and favoring longer-range information-technology projects. That means investors have to get used to waiting for the revenue to show up.
“They’ve got this continuous strength in bookings but this inability to gain traction on revenue, and it’s becoming a growing concern,’ said Josh Olson, an analyst at Edward Jones & Co. in Des Peres, Missouri. ‘‘The fourth quarter is going to be a challenge, and the trend could play out into their next fiscal year.” Olson has a hold rating on the shares.
IBM slipped 3.1 percent to $189.50 at 10:05 a.m. New York time, while Cognizant Technology Solutions Corp. (CTSH:US) fell 0.8 percent to $62.60. Before today, Accenture, which ranks second to IBM in consulting revenue, had jumped 21 percent this year through yesterday, outperforming IBM’s gain of 2.1 percent.
Fiscal fourth-quarter revenue will be $6.7 billion to $7 billion, Dublin-based Accenture yesterday in a statement. That fell short of the $7.36 billion average estimate of analysts, according to data compiled by Bloomberg.
Third-quarter net income attributable to Accenture rose 18 percent to $810.3 million, or $1.21 a share, from $689.2 million, or $1.03 a share, a year earlier. Excluding a reduction in reorganization liabilities, earnings were $1.14 a share in the period, which ended in May. Analysts had predicted $1.13 on average, according to data compiled by Bloomberg.
“We’ve had some areas of our business where the activity is much different than we would have expected, some of which would have been tough to predict,” David Rowland, Accenture’s new chief financial officer, said on a conference call. “We are not in the business of missing guidance and we don’t find that to be acceptable, so that would not be our expectation going forward.”
Accenture is considered a bellwether for the information-technology market because its earnings cycle ends one month sooner than competitors. Revenue for the quarter was $7.2 billion, missing the $7.43 billion analysts had predicted on average.
“We always want to get an update from them on the overall IT services spending environment,” said Jason Kupferberg, an analyst at Jefferies LLC in New York. “The numbers have not looked great.”
The company is seeking to boost growth by expanding its Accenture Interactive division, which caters to chief marketing officers who want to improve their investments in Internet outreach. Accenture announced plans in May to spend $316 million to buy Hong Kong-based marketing company Acquity Group Ltd. (AQ:US) to bolster the effort.
IBM, based in Armonk, New York, is scheduled to report its earnings in three weeks.
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