ACN Reports a Strong Quarter, Raises Guidance

Updated from 1:40 p.m. EST on Dec. 19.

Accenture (ACN - commentary - Cramer's Take) reported strong numbers last night, with solid revenue and higher-than-expected earnings. Management also raised guidance going forward, to boot.

Revenue came in at $5.7 billion, and earnings were 60 cents per share vs. expectations of $5.46 billion and 56 cents per share. The number was also a lot better than the penny-per-share beat that I was expecting.

The company raised fiscal 2008 guidance to $2.36 to $2.41 per share vs. consensus of $2.26 per share.

Bookings were $5.92 billion vs. expectations of between $5.5 billion and $5.7 billion, split 57% in consulting and 43% for outsourcing. Overall bookings were up 7% year over year. Consulting booking grew 12.5% year over year, while outsourcing bookings were up just 1%.

The company said on the call that its commercial and high-tech products and resources were strong and that government and finance were a bit weaker.

The gross margin came in at 31.2% and the earnings before interest and taxes margin was 14.2% despite a companywide salary hike in 2007.

Accenture has $2.5 billion in cash on the books, and the company continues to buy back more shares than it is doling out in options; this is a great thing from a shareholder perspective. Most companies keep buying back stock but keep doling out more options, so as to never really change the share count -- and, worse still, increase it.

From a macro point of view, management stated that the company has not seen any signs of a slowdown due to the subprime thievery going on. In fact, management stated that Accenture has seen a slight uptick in its finance vertical, which is scrambling to lower costs.

Regionally, the company's Americas revenue was up 6% year over year; the Europe, Middle East, Africa and India segment was up 19%; and Asia was down 4%.

---

At the time of publication, Somaney had no positions in the stocks mentioned, although positions may change at any time without notice.

Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.