This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Light Forecast Smacks Cognizant

Updated from 11:23 a.m. EST

SAN FRANCISCO -- Tech services firm Cognizant (CTSH) 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) saw its shares drop $3.49, or 7%, to $45.33. Accenture (ACN) shares were recently trading down $1.49, or 4%, to $36.06.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs