Earnings Preview: Accenture

Accenture (ACN) is expected to report Q4 earnings Thursday after market close, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 66c for EPS and $6B for revenue, according to First Call. On the last earnings call, management provided FY08 EPS guidance of $2.63 to $2.65, above consensus at the time.

Analyst Views

Cowen expects the August quarter's results to be at least in-line with Street's expectations, with sequential improvements in gross and operating margins. Cowen said that during the past five quarters, Accenture and its IT Services peers maintained a consistent positive view on demand trends. However, considering the increased uncertainty created by the recent events taking place in the market, the financial credit crisis and the increasing prospects for longer sale cycles and spending freeze, sector commentary from the Accenture could turn more cautious.

On Sept. 19, Wachovia downgraded the IT offshore outsourcing sector to market weight from overweight, citing the recent chaos among major financial service providers, who are a key source of business for the IT offshore outsourcing sector. The financial service providers are expected to cut back further on IT spending in 2008 and 2009, given the increased level of turmoil in the equity and credit markets. Wachovia also downgraded its rating on Accenture to Market Perform from Outperform.

Then on Sept 22, Deutsche Bank said it believed Accenture's fundamentals were intact despite the macro concerns. The firm did lowered its estimates on currency headwinds, however, but expect an in-line Q4.

Key issues for the conference call: Commentary on forward guidance, sale cycles and spending freezes.