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Yesterday, after market close, Amdocs Limited (NASDAQ:DOX) declared financial results for the third quarter of fiscal 2010. Quarterly net income, on a GAAP basis, was $92.3 million or 45 cents per share compared with a net income of $85.6 million or 42 cents per share in the prior-year quarter. However, third quarter fiscal 2010 adjusted (excluding special items) EPS of 52 cents was just in line with the Zacks Consensus Estimate.

Quarterly total revenue of $753.25 million was up 9.1% year over year. However, third quarter revenue was below the Zacks Consensus Estimate of $758 million. This was mainly due to an approximate $5 million loss in adverse movement of foreign currency exchange rate and weak demand in the European regions.

Cost of sales in the third quarter of fiscal 2010 was $480.5 million, up 8.6% year over year. However, gross margin in the same quarter was 36.2% compared with 35.9% in the year-ago quarter. Quarterly operating expenses were $167.5 million, up 8.2% year over year.

At the end of the second quarter, total order backlog was $2,470 million compared with $2,460 million at the end of the pervious quarter. Last April, the board of directors of Amdocs authorized a $700 million share buyback plan. In the reported quarter, the company repurchased $209 million worth of shares.

During the first nine months of fiscal 2010, Amdocs generated $537.6 million of cash from operations compared with $335.5 million in the same period of fiscal 2009. Free cash flow (cash flow from operations less capital expenditures) in the first nine months of fiscal 2010 was $478.1 million compared with $270.4 million in the same period of fiscal 2009.

At the end of the third quarter of fiscal 2010, Amdocs had approximately $1.29 billion of cash and marketable securities and no outstanding debt on its balance sheet compared with $1.17 billion of cash and marketable securities and no outstanding debt at the end of fiscal 2009.

Segment Results

Service revenue was $727.7 million, up 9.6% year over year. License revenue was $25.6 million, down 1.9% year over year. Technologically, Customer Experience revenue was $693 million, up 7% year over year. Systems Directory revenue was $60.2 million, up 42% year over year. Geographically, North America generated $572.3 million, up 8.5% year over year; Europe generated $80.6 million, down 4.5% year over year; and the Rest of World generated the remaining $100.3 million, up 28.3% year over year.

Future Financial Outlook

Management is expecting fourth-quarter fiscal 2010 revenue to be within the range of $755 million to $770 million. Non-GAAP EPS, excluding acquisition-related cost and equity based compensation, is projected in the range of 57 cents – 60 cents. Equity-based compensation is expected at approximately 4 cents – 5 cents per share. EPS, on a GAAP basis, is expected to be within the range of 44 cents – 49 cents.

Source: Amdocs Reports Just In-Line, Suffers From Weak Demand in Europe