Outsourcing Business Helps Boost Accenture’s 1Q Revenue

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Joe Forehand, chairman and CEO of consulting heavyweight Accenture, told analysts a focus on outsourcing bolstered revenue growth and resulted in a strong performance during the company's first full quarter as a public company.

That growth helped offset substantial losses in its investment and venture capital portfolio amid a sharp decline in technology spending and uncertain economic climate, Forehand told analysts during a conference call Wednesday morning to discuss earnings for the first fiscal quarter.

"Our focus on business transformation outsourcing helped us to achieve 32 percent revenue growth in outsourcing for the quarter," Forehand said. "Growth in this area is quite encouraging."

For the first quarter ended Nov. 30, Bermuda-based Accenture reported income, before charges, of $414 million, or 25 cents per share, on sales of $2.99 billion. That's slightly better than analysts' expectations 24 cents per share, according to First Call.

The results compare with income of 23 cents per share for the same period last year on sales of $2.83 billion, when the company was still known as Andersen Consulting.

Accenture, which split from accounting firm Arthur Andersen in 2000, has seen its shares jump nearly 90 percent since it went public last July. Accenture closed trading Tuesday at $26.45 per share. Following the earnings call, shares were up about 3 percent, to $27.28 per share, on a volume of 1.7 million.

Losses for the quarter include $90 million in the company's investment and venture capital portfolio and $24 million in revenue lost in the wake of the Sept. 11 terrorist attacks, Forehand said. The company expects to reposition its investment portfolio and present alternatives to its board in time to finalize the plan by the end of next quarter, he said.

Meanwhile, the company reported strong growth in three of its five global market units. Revenue for its government unit rose 58 percent to $337 million. The products and resources units reported increases of 22 percent and 17 percent, respectively, to $650 million and $541 million.

On the other hand, first-quarter revenue for the communications and high-tech, and financial services units, were down 14 percent and 6 percent, respectively, to $743 million and $717 million, from the same period last year.

Forehand said while he doesn't expect those two areas to rebound substantially during 2002, there is a growing demand. In geographic regions, Forehand said Europe is still generating impressive growth. While business in the United States is stabilizing, Forehand said he doesn't see any rapid growth in the near future. In Asia-Pacific, business is relatively flat, he said.

In spite of global economic uncertainty, however, Accenture reported more than $5.6 billion in new sales this fiscal year. For example, Accenture recently expanded its existing outsourcing agreement with Bell South, one of the company's largest clients. As part of the contract, Accenture will manage additional application projects for the software backbone of Bell South's telephone and Internet services.

Forehand also highlighted two signed contracts with the U.S. Department of Education, worth more than $200 million, to help "modernize several administrative processes."

"These are value-based innovative contract models," Forehand said. "We have been stressing that public-private partnerships are the best way to transform government so we are very pleased with this step."

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