Leading information technology services provider Cognizant Technology Solutions Corporation (NASDAQ:CTSH) reported revenues of $1.31 billion in the fourth quarter of 2010, up 45.2% year over year and up 7.7% sequentially, exceeding the Zacks Consensus Estimate of $1.278 billion and management's expectation of at least $1.27 million.
Net income came in at $206.2 million or 66 cents per diluted share, compared to a net income of $144.0 million or 47 cents per share in the fourth quarter of 2009. This easily beat the Zacks Consensus Estimate by a penny. Operating margin came in at 19.8%.
Excluding stock-based compensation expenses of $14.9 million, Cognizant posted an operating margin of 19.8%, within management's targeted range of 19%−20%.
For full 2010, Cognizant reported revenues of $4.59 billion, up 40.1% year over year. Net income came in at $733.5 million or $2.37 per diluted share compared to a net income of $535.0 million, or $1.78 per diluted share in 2009.
Going forward, management expects revenues of at least $1.36 billion in the first quarter of 2011. EPS is projected at 63 cents. Excluding stock-based compensation expenses, EPS is forecasted at 67 cents.
Management stated that business rebounded quickly in 2010 and clients are increasingly turning to Cognizant to outsource a broader range of services. Hence, Cognizant expects a stronger 2011.
Cognizant now expects revenues of at least $5.79 billion in 2011, up 26% year over year. EPS is likely to be at least $2.68. Excluding 17 cents of estimated stock-based compensation expenses, EPS is forecasted at $2.85.
Cognizant earlier stressed that clients are not just seeking cost efficiencies, but are also stepping up investments in their business platforms and new capabilities to drive growth and innovation. The company competes with Infosys Technologies Ltd. (NASDAQ:INFY) and Wipro Limited (NYSE:WIT) in this space.