Updated from 11:23 a.m. EST
SAN FRANCISCO -- Tech services firm Cognizant (CTSH - Get Report) suffered a massive selloff after reporting third-quarter earnings as investors appeared spooked by an apparent slowdown in IT spending.
While the company reported third-quarter revenue and profit above expectations, its forecast for fourth-quarter growth forecast was lighter than in past years. During a conference call with analysts, Chief Executive Francisco D'Souza and CFO Gordon Coburn said they hadn't seen the typical flurry of fourth-quarter spending, known as a "budget flush," possibly stemming from macroeconomic concerns.
The company's third-quarter net income rose to $96 million, or 32 cents a share, from $61 million, or 20 cents a share, in the same quarter a year earlier.Excluding stock-based compensation expenses, Cognizant earned 34 cents a share, beating analysts' consensus forecast of 32 cents, according to Thomson Financial. Revenue rose 48% to $559 million, edging past most forecasts. For the fourth quarter, Cognizant forecast earnings of 34 cents a share, excluding items, matching analysts' average estimate. The company is expecting revenue in the range of $590 million to $595 million, below the $598 million analyst consensus. Cognizant shares were recently down $7.47, nearly 19%, to $32.14, on volume that is nearly six times the average. The selloff hit other IT services and consulting firms. India-based Infosys (INFY - Get Report) saw its shares drop $3.49, or 7%, to $45.33. Accenture (ACN - Get Report) shares were recently trading down $1.49, or 4%, to $36.06.