The Hindu Business Line : Cognizant Q2 net jumps 26% to $103.9 m

Chennai, Aug. 2 Cognizant Technology Solutions, the US-based IT services company with offshore development centres in India, reported a 26 per cent jump in net profit to $103.9 million for the second quarter ended June 30, 2008, from $82.3 million in the corresponding period in 2007. Quarterly revenue increased by 33 per cent to $685.4 million ($516.5 million).

For the quarter, just over 78 per cent of revenue for Cognizant came from clients in North America. For the first time, Europe made up over 20 per cent of the total quarterly revenue at 20.3 per cent. One-and-a-half per cent of revenue came from the Asian market, according to a company press release.

Global headcount, including both technical professionals and support staff, totalled approximately 59,300 — up over 1,300 from March 31 this year, and up almost 14,000 from the second quarter of 2007.

Guidance

Cognizant has revised downward its earlier estimates for the full-year revenue. It expects revenues for fiscal 2008, ending December, to be at least $2.81 billion instead of the original estimate of $2.95 billion.

“Due to the spread of caution amongst our client base, we are taking the conservative approach in resetting 2008 guidance to be at least $2.81 billion. That would mean a full year growth of about 32 per cent over 2007 revenues, instead of the anticipated 38 per cent,” said Mr Francisco D’Souza, President and Chief Executive Officer, Cognizant, discussing the financial results with analysts.

“While we are disappointed that our full year performance will be below our prior expectations, we feel comfortable with this revised growth target for 2008, and believe that the drivers of demand remained intact in our business,” he added.

Commenting on pricing, Mr Gordon Coburn, Chief Financial and Operating Officer, Cognizant, said, “It is stable.”

Capital expenditure for the quarter was around $32 million. For the full year, “given we are going slower, capex will probably come in below the original target of $250 million. We have not fully worked out how much below it would be,” he said.

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