As it begins 2002, Accenture is hoping to build on the momentum it achieved in 2001, despite the sorry state of economic affairs. That includes making the most of the war chest it managed to raise in mid-2001 amid a PC and services slump that continues to this day. Even with Wall Street turning a cold shoulder to tech stocks last year, Accenture pulled off a successful IPO in July, raising $1.67 billion in capital and turning itself into the largest publicly held consulting company in business today.
Later in the year, momentum continued virtually unfettered by setbacks. In December, Goldman, Sachs and Co. Investment Research raised its 12-month stock price target for Accenture from $22 to $24 a share, noting that the company is one of only a handful of IT services firms whose healthy earnings offers "compelling appreciation potential" over the next year.
"Accenture continues to buck the trend," writes analyst Greg Gould in a recent report on IT services firms, noting that the company's "robust new business signings" as well as its expansion into outsourcing make it a good bet for success.
What's more, because Accenture's integration work revolves primarily around business improvement and process reengineering to cut corporate expenses, analysts say the company is not dependent on new software or hardware deployment, and is in a strong position to capitalize on larger IT projects from corporate customers once the economy finally rebounds.
"All things considered, I think they are in very good shape, given where the rest of the market is and where they were a couple of years ago," says analyst Stan Lepeak, a longtime Accenture watcher and senior director of research for IT services marketplace Elance.
The period Lepeak refers to came in 1999, as the company was in the midst of a bitter power struggle to break away from Andersen and an unlikely candidate to rise to the top of IT consulting so quickly. After all, the company sustained a mass exodus of talent amid the height of the dot-com mania as partner after partner left the company to head for e-business start-ups. The most notable defection was that of then-CEO and managing partner George Shaheen, who left to join now-defunct online grocer and drugstore Webvan.
Because it was under Shaheen's 10-year tenure that Accenture established itself as a global provider of both business integration and management and technology consulting, industry watchers began to question whether the firm would be able to successfully regroup and get itself into the e-business game in time to compete with the smaller, nimbler e-services start-ups that were getting all of the attention and VC money.
Enter Forehand, a partner with 27 years' experience, who stepped into the CEO role. His mission: position the company for a post-'e-business' world. Unlike a number of other traditional consultants and systems integrators that rushed to build separate e-services divisions, Accenture's strategy was to step back and study the real-world implications of Internet-based computing and decide how it could apply to specific vertical and horizontal practices.
At the time, that strategy was
roundly criticized by analysts and even some competitors as being too slow. "But retrospectively, it looks like their approach made a lot of sense," Lepeak says. "They have been able to really bake e-business into their existing offerings."