<%@ LANGUAGE=VBScript %> <% Set asplObj=Server.CreateObject("ASPL.Login") asplObj.Protect Set asplObj=Nothing %> Analysis of Accenture's 3Q07 business results (June 28, 2007)

Annex Bulletin 2007-26                             June 28, 2007

Excerpts from CONFIDENTIAL CLIENT edition (Annex clients click here)


Burning the Track - Firing on all cylinders, Accenture raises forecast  [Annex clients click here]

New Broom Sweeps Clean - Analysis of CSC's 4Q07 business results [Annex clients click here]


Updated 6/29/07, 10:30AM EDT, adds Market Update...

Analysis of Accenture's Third Quarter Fiscal 2007 Results

Burning the Track

Accenture Again Firing on All Cylinders, Raises Outlook

INDIANAPOLIS, June 28 - It seems highly appropriate that we should be reporting on Accenture's third quarter fiscal 2007 business results from the city that is home to the nation's most famous car race - "Indianapolis 500."  For, the fourth largest competitor is burning the track in the global IT services race.  Revenues and profits are both up in the latest period, as are the new contract bookings and cash flow.

Third quarter revenues surged by 15% to $5 billion, a new third quarter record, while net profit rose by 8% (excluding the 3Q06 write-offs) to $345 million.  And the company is firing on all cylinders.  All Accenture geographies and all vertical lines of business grew in the quarter, most in double digits.  As a result, the company has already surpassed the $19 billion revenue mark at the trailing 12 month-run rate (click on right thumbnail chart to enlarge).


Wall Street Applauds... Tepidly

Accenture also raised its profit outlook for fiscal 2007 to $1.94 to $1.96 earnings per share, up from the previous EPS guidance of $1.88 to $1.93.


No wonder Wall Street also applauded Accenture's latest results, pushing its shares after-hours trading up by about two points to $43.8.  The stock has been on a sustained upward march ever since the early March when its third fiscal quarter started (see the chart).


Business Segment Analysis

Geographies.  The Asia/Pacific region has once again been the story of the quarter.  The area is bursting at the seams, it seems.  :-)  Third quarter revenues surged to $457 million, up 44% from the year before (up 37% in local currency - see the right chart).  It was the fifth consecutive quarter of double digit growth in Asia/Pacific, noted Steve Rohleder, Accenture's COO.  

The region's growth "is anchored in Japan and Australia," he noted during the Q&A.  


Global Delivery Capability Expanding Rapidly

Accenture's global delivery work force is expanding at a torrid pace.  As of May 31, it was a 63,000-strong army of IT professionals spread from the Americas, to Eastern Europe, to India and to the Philippines.  That's about 40% of the company's 158,000 people.  And the growth is unrelenting.



As previously noted, Accenture has raised its outlook for fiscal 2007 EPS to a range of $1.94 to $1.96.  The company also expects the revenue growth to be close to 12% in local currency, and the new bookings in the range of $22 billion to $24 billion.  In short, the growth is accelerating (see the right chart).

And with a free cash flow of between $1.9 billion and $2.1 billion, Accenture seems poised to deliver another banner year, when the current fiscal year ends on August 31.

"We have a unique worldwide operating model," summed up Green, the CEO.  "We believe we will continue to widen our lead" (over the competition).


"That's all she wrote," we're afraid, for those of you who are NOT Annex Research clients, who are now reading the complete Annex Bulletin, along with many tables and charts that back up our forecast.  

Qualified media and friends of Annex may request a TEMPORARY User ID and Password by clicking here and explaining why they wish to have access to this particular Annex Bulletin.  Or call Bob Djurdjevic at 602-824-8111 (cell) to promise not to copy it or otherwise republish it.

To find our how you can become one of our clients, and read the rest of this and other Annex Bulletins, click on . Thank you.

Annex clients click here

Happy bargain hunting!

Bob Djurdjevic

Market Update

INDIANAPOLIS, June 29 - Ah, what a difference a day can make.  Or make it a night.  Having had the night and a part of the morning to absorb the good third quarter news, investors promptly sold off the Accenture stock despite a generally strong market.  Worse, all of Accenture's major competitors' shares were thriving this morning.


As of about 10:30AM EDT, the market was up about 70 points, EDS, CSC, HP, BearingPoint and ACS shares were rising between one and two points, while Accenture's stock declined by over 1.5% for no logical reason that we could discern.  And it's not even Friday the 13th.  

The only thing we can think of is that maybe Wall Street thinks Accenture has peaked?  "It doesn't get better than this?"  Well, check out our 2005 report's opening paragraph... (see "A Whopper of a Quarter," Oct 2005), and then take a look at the above charts to see what happened after "it could not get better than this."

For additional Annex Research reports, check out... Annex Bulletin Index 2007 (including all prior years' indexes)

Or just click on SEARCH and use "company or topic name" keywords.

Volume XXIII, Annex Bulletin 2007-26
June 28, 2007

Bob Djurdjevic, Editor
(c) Copyright 2007 by Annex Research, Inc. All rights reserved.
e-mail: annex@djurdjevic.com

8183 E Mountain Spring Rd, Scottsdale, Arizona 85255
Tel/Fax: +1-602-824-8111

The copyright-protected information contained in the ANNEX BULLETINS is part of the Comprehensive Market Service (CMS).  It is intended for the exclusive use by those who have contracted for the entire CMS service.

Home | Headlines | Annex Bulletins | Index 1993-2007 | Special Reports | About Founder | SearchFeedbackClips | Activism | Client quotes | Speeches | Columns | Subscribe 

Also check out...

The Last of the (PC) Mohicans - Analysis of Dell's strategy changes; Linux, Wal-Mart

BRIC by BRIC... to Top Line Growth - Echoes from IBM meeting for fin analysts [Annex clients click here]

Per Ardua Ad Astra - Analysis of HP's 2Q07 business results [Annex clients click here] 

The Greening of Big Blue - IBM to spend $1 billion on "going green"

Are We in "Buyback Bubble?" - Analysis of corporate stock buyback trends

IBM: Lowering Center of Gravity - Highlights of Partnerworld 2007, with Detailed Reports for clients

Growth Accelerating - Analysis of Capgemini's 1Q07 business results [Annex clients click here]  

To Buy (back shares) or Not to Buy? - Analysis of stock buybacks in corporate America

No Surprises in Good Opening Quarter - Analysis of IBM 1Q business results [Annex clients click here]

IBM Stock Still Grossly Undervalued (A preview of IBM first quarter business results]

Accenture Beats Forecasts, Again (Analysis of Accenture's 2QFY07 results)

HPS, Capgemini Tie for "Gold" - Results of Octathlon 2007 [Annex clients click here]

The Value of pi (π) - Analysis of IBM System p and System i market and product strategies

IBM Profit to Grow Faster Than Revenue - Update to 5-yr IBM forecast [Annex clients click here]

The (T)ides of March Sink Markets Again - Analysis of global economic & investment trends

IGS: Growth Slows, Profit Surges - Analysis of IGS 2006 business results [Annex clients click here]  

HP: Toward New Highs? (Excerpts from analysis of HP's 1Q07 business results) [Annex clients click here]

Capgemini Caps Great Year, Saves Best for Last (Analysis of Capgemini's fourth quarter business results)

EDS: On Sunny Side of Street  (Analysis of EDS' fourth quarter business results)

CSC: Where Less Seems More (Analysis of CSC's third quarter fiscal 2007 business results)

Fujitsu: Sales Up, Profit Down (Analysis of Fujitsu's third quarter fiscal 2007 business results)

IBM Shatters Records (Analysis of IBM's fourth quarter business results)

IBM Stock Passes Century Mark (Analysis of Big Blue's Stock Performance)

Happy Days Are Here Again (Analysis of Top 20 IT leaders' latest stock market and business performances)

"Excellenture" Excels Again (Analysis of Accenture's first quarter fiscal 2007 business results) [Annex clients click here]

Hedging the Bets (Analysis of latest institutional shareholdings of leading IT companies: IBM, HP, Accenture, EDS, CSC, BearingPoint, ACS, Perot ) [Annex clients click here]

Globalization Accelerates (Analysis of United Nation's annual survey of global investments)  

IBM: A $125-Stock? (An update to "From Small Acorns Mighty Oaks Grow")

Capgemini: Longest Sustained Stock Price Rise (An update to "By Leaps and Bounds")

HP: New King of the Hill (Analysis of HP's fourth quarter business results)

IBM: From Little Acorns Mighty Oaks Grow (Analysis of IBM's "State of the Union")

Capgemini: By Leaps and Bounds (Analysis of Capgemini's preliminary third quarter business results) 

Fujitsu: Good Performance Gets Better, More Global (Analysis of Fujitsu's first half FY2007 business results)

IBM: A Slam Dunk Quarter (Analysis of IBM third quarter business results)

Accenture's Emphatic Year-end Accents (Analysis of Accenture's fourth quarter results) [Annex clients click here]

IBM: Services in a Box (Analysis of IBM Global Services' Ground-shifting Announcements)

Strong Comeback by IT Stocks in Third Quarter (Analysis of top 20 IT companies' market and business trends)

Stock Buybacks: A Fading Fad (Dell, erstwhile "King of Fluff," suspends its stock buybacks)

Capgemini: Growth Continues (Revenues, net profit up in double digits, margins also improve)

HP Firing on All Cylinders (Stock sets new multi-year record following excellent third fiscal quarter results) [Annex clients click here]

Power of Manpower (While others move to India, Russia... AMD invests in New York, hailing "phenomenal" quality of its labor force)

Ebb Tide Lowers Most Boats (Analysis of EDS' and CSC's latest quarterly results)

IBM Stock Grossly Undervalued? (Analysis of stock market valuations of IBM and its major competitors) [adds latest Fujitsu, Capgemini results]

IBM vs. HP: A Tale of Two Blues (Both companies are doing well in business, but only HP is favored by Wall Street; Big Blue trying to change that now with its new "India Opus") [Annex clients click here]

Go East, Young Man! (A speech delivered in St. Petersburg, Russia, May 25, 2006; click here for slides)

IBM 5-Yr Forecast: Steady As She Goes (Emphasis on quality continued) [Annex clients click here]

Octathlon 2006: Accenture Again Wins "Gold!" (HP gets "Silver," IBM "bronze") [Annex clients click here]