Accenture Shares Shoot Higher

Despite the bullish talk about the fourth-quarter and year-end results, Accenture's management seemed to be tempering investor expectations in case a U.S. economic slowdown takes hold. The company didn't specify whether its forecast of 9%-12% annual revenue growth includes currency effects.

The cascading value of the dollar against the European, Asian and Canadian currencies can mask a slowdown in demand. In the fourth quarter, for example, revenue grew 29% in dollar terms but only 23% in local currency terms.

Management also seemed defensive that its ratio of consulting work to outsourcing work would remain unchanged in the near term. Some investors had expected the ratio to shift in favor of outsourcing contracts that provide stability and reliable recurring revenue, albeit at the expense of some margin growth.

CEO Green said that Accenture's consulting work helps companies deal with long-term strategic issues like complying with regulatory mandates. These projects, said Green, are less susceptible to fluctuations in the economy and therefore less discretionary.

"I'm skeptical about that," says Pax's Trzcinka, referring to the claim that little of Accenture's consulting work is discretionary. "I think it's higher than what they claimed. Traditionally, consulting has been more cyclical and slows down in tough times."