Accenture Sees Strong Q2

In addition, the company outlined its strategy to eliminate risks associated with volatile venture capital investments.

In a preliminary quarterly earnings report Tuesday, Accenture told analysts its revenues are expected to be about $2.91 billion for the quarter ended Feb. 28, with $385 million to $400 million in operating income. If so, the results would beat analysts' consensus estimate of $2.88 billion in revenues and $361 million in operating profit.

Excluding write-downs from investments, the company expects to report net income between $235 million and $245 million, beating analysts' consensus estimate of $218 million.

The company, which has been affected by losses associated with its existing VC activities, says it will discontinue VC investing, though it will continue to make other investments and accept equity and equity-linked securities. It plans to sell minority ownership interests that could cause future earnings volatility, a move that is in line with previously reported plans to reposition its venture and investment portfolio in order to eliminate the related earnings volatility. To do that, the company will consolidate the interests into a single subsidiary, which it would then sell.

Accenture, which has retained an investment bank and is in talks with potential buyers, says the plan is to retain a percentage ownership of the subsidiary in connection with an ongoing alliance with the buyer. The transaction is expected to close by the end of the calendar year.

Accenture's loss on investments in the second quarter includes an expected charge of $212 million from the sale, with the company's venture and investment portfolio expected to have a net book value of approximately $95 million.