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Cognizant fares well but cuts outlook

Calcutta, May 7: Nasdaq-listed Cognizant has reported a 16.95 per cent growth in net income at $243.65 million in the first quarter of 2012 compared with $208.32 million in the same quarter of the previous year. The company, however, lowered its full year forecast on the back of “slower acceleration in demand”.

Revenues for the quarter rose 24.8 per cent to $1.71 billion, inching past its earlier guidance of $1.70 billion. The company had recorded revenues of $1.37 billion in the same period last year.

Cognizant, however, failed to replace Infosys as the second largest software provider of the country. Infosys registered a 10.5 per cent growth in revenues at $1.77 billion in the January-March quarter.

“Due to slower than anticipated acceleration in demand as we entered the second quarter, we are adopting a more conservative stance for the remainder of the year and revising our guidance to at least 20 per cent revenue growth for 2012,” Cognizant CEO Francisco D’Souza said.

“We continue to believe that we have the right portfolio of services to sustain our industry-leading growth and also meet the changing demands in the market as clients continue to grapple with their dual mandates of cost containment and innovation/business transformation,” he said.

GAAP operating margin for the quarter stood at 18.6 per cent. Excluding stock-based compensation expense of $31.4 million, non-GAAP operating margin was 20.4 per cent, slightly higher than the company’s targeted 19-20 per cent range.

Meanwhile, in its guidance, the company forecast revenues at $1.79 billion in the second quarter, slightly higher than the $1.77-billion revenue guidance by Infosys.

Cognizant, however, lowered its revenue guidance for the year to at least $7.34 billion from $7.53 billion forecast earlier. Revenue for the fiscal is expected to rise 20 per cent over the previous year.

The company will expand its existing share buyback programme by $400 million, bringing the total authorisation under the buyback programme to $1 billion. Till now, $423 million shares have been repurchased under this programme. The expiry date of the buyback programme has been extended to December 31, 2013.

The company finished the quarter with almost $2.5 billion of cash and short-term investments. It spent $60.5 million on capital expenditure. During 2012, it expects capital expenditure to total $370 million.

 
 
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