CORRECTED - Cognizant raises full-year profit forecast, shares up

COGNIZANT-RESULTS:CORRECTED - Cognizant raises full-year profit forecast, shares up

 

(Corrects throughout to make clear that the company's GAAP forecasts, not non-GAAP forecasts, are comparable with analysts' estimates. The error first appeared in an earlier version of the story)

REUTERS - Cognizant Technology Solutions Corp raised its adjusted full-year profit forecast as an increase in customer accounts helped the IT services provider report a higher-than-expected quarterly profit, sending its shares up 13 percent.

Cognizant's upbeat outlook was in contrast to its peers Infosys Ltd and Wipro Ltd , who had forecast weak sales, citing slowing global outsourcing spend.

Teaneck, New Jersey-based Cognizant had been gaining ground over its Indian rivals as it has traditionally worked with relatively lower margins, helping it to win more contracts while other IT services companies grapple with the slowing economy.

"The majority of our growth for the remainder of 2012 will come from the ramp-up of clients that we won over the past months and years including recent transformational engagements such as ING US, Philips Electronics NV and others," Chief Financial Officer Karen McLoughlin said on a conference call.

The company entered into a $330 million deal in June with the U.S. unit of Dutch insurer ING Groep NV to expand the business process management contract between the two.

Cognizant raised its full-year earnings forecast to at least $3.38 per share from $3.36 per share. It reaffirmed its revenue forecast of at least $7.34 billion.

Analysts on average were expecting full-year earnings of $3.37 per share on revenue of $7.34 billion, according to Thomson Reuters I/B/E/S.

Cognizant expects its adjusted operating margin to remain in the range of 19 percent to 20 percent for the rest of the year. The margin rose to 20 percent for April-June from 19.8 percent a year earlier.

The company, which was founded in 1994 as a captive unit of Dun & Bradstreet in India, said net income rose to $251.9 million, or 82 cents per share, for the second quarter from $208 million, or 67 cents per share, a year earlier.

Excluding items, the company earned 88 cents per share.

The company, which also competes with Accenture Plc and Computer Sciences Corp , said growth returned to some of its largest banking clients in the quarter. The company counts J.P. Morgan Chase & Co , Rabobank and UBS AG among its core banking clients.

Revenue rose 21 percent to $1.8 billion.

Analysts on average had expected earnings of 80 cents per share on revenue of $1.79 billion.

Cognizant shares have fallen about 20 percent since May 7 when it lowered its full-year forecast for the first time in nearly four years. Shares were up 12 percent at $65.05 on Monday on the Nasdaq.