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Accenture Expects To Name New CEO Within 5 Months

Interim CEO David Rowland says there would be ‘no pause’ in Accenture’s operations -- which includes up to $1 billion in acquisitions -- as it awaits the board’s decision.

Accenture’s interim CEO David Rowland discussed the company’s succession plan on a call with investors yesterday, saying the company was likely to choose an internal candidate before the end of the fiscal year, which ends on Aug. 31.

“Our board continues to execute a very rigorous and comprehensive process, which is going very well,” Rowland said. “Given the strength of our leadership bench, our expectation is that we will name an internal candidate and that the process will be completed by the end of this fiscal year.”

He said the company still has $1 billion budgeted in acquisitions this year as it comes off a winning quarter, with the gigantic solution provider posting 5-percent year-over-year revenue growth in its first quarter without Pierre Nanterme at its head.

Nanterme died in January after a lengthy battle with cancer. Interim CEO David Rowland kicked off the company’s second quarter earnings call Thursday morning by taking a moment to recognize the former leader’s absence.

“Before we get into the quarter, I want to take a moment to acknowledge Pierre and how important he was to Accenture in his decades-long career and his leadership as chairman and CEO,” Rowland said. “From an earnings standpoint, it’s certainly a different feeling doing an earnings call without him, but as you’ll hear in our comment, I’m confident Pierre would have been really pleased with all we accomplished.”

Accenture grew second quarter revenues by 5 percent year over year, with $10.5 billion in sales. Earnings per share were up to $1.73 from $1.37 a year ago, while operating income increased 7-percent to $1.39 billion this quarter. The strong financial results came on the back of “record new bookings” of $11.8 billion, Rowland said.

In a follow-up question with analysts he said the search for a CEO will not pause business deals, acquisitions, or development.

“We operate, and I’m executing the responsibilities in the same way that Pierre would have executed them, if he was on the call today,” Rowland said. “So no pause. We continue to drive our business forward.”

Accenture announced early in the fiscal year that it had committed $1.5 billion to acquisitions, and thus far the company has spent about $500 million of that, with Accenture Interactive buying about seven companies, Rowland said. But the philosophy behind the deals remains keeping Accenture at the leading edge of solutions and services, he said.

“We’ve done three in Industry X.O. We’ve done four in technology,” Rowland said. “If you look at technology, three of those were directly tied to deepening our skills and the platforms. So I think there were a couple in Oracle and one SAP, as an example. There was another one around data and analytics. And then we had several vertical specific acquisitions, several in financial services, as an example. And so I think that’s a good representation of we’re all about investing in “the New”, so that’s a good roadmap for our acquisition strategy, as well as our highest-growth, highest-priority verticals.”

Rowland said Accenture’s customers continue to seek guidance on their cloud migration strategy, and striking the correct balance between public and private cloud. He said customers are weighing the security of placing data on a private cloud, against the capabilities of the public cloud.

“There’s also the opportunity to exploit the power of the public cloud, which maybe exceeds the potential power of any private cloud, with all of the capabilities and especially the machine learning and artificial intelligence kind of capabilities that are embedded in many of the cloud offerings,” he said. “So if anybody thinks that, that is kind of behind us, I would say to the contrary. In fact, again, I was just with one of our client CEOs two weeks ago and the first thing that he wanted to talk about was cloud migration strategy.”

Rowland also addressed analyst questions about a possible economic slowdown in the U.S., saying it seemed unlikely to affect the spending that customers will make with Accenture.

“Our observation is that, with the pace of disruption in global business, with the pace at which industries are getting disrupted, companies are getting disrupted, there’s a recognition we believe we see among companies that you cannot afford to hit the pause button,” he said. “You cannot afford to slowdown.”

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