Cognizant Technology Solutions has cut its revenue expectation for the year 2012 following slower-than-anticipated acceleration in demand for IT solutions.

The US-based software major said it expects to report a revenue of $7.34 billion for 2012, which was lower than its estimate of $7.53 billion made last quarter.

While announcing the December quarter financial results, Cognizant said that it expects 2012 revenue to go up by 23 per cent over that of 2011.

“Due to a slower-than-anticipated acceleration in demand as we entered the second quarter, we are adopting a more conservative stance for the remainder of the year and revising our guidance to at least 20 per cent revenue growth for 2012,” said Mr Francisco D'Souza, Chief Executive Officer, Cognizant.

Infy vs Cognizant

Meanwhile, Cognizant did not overtake Infosys in revenue in the March quarter but is likely to do it in June quarter. This is based on the revenue that the two companies are anticipating in the second quarter of the calendar year. The US-based company has said that its June quarter revenue is anticipated to be at least $1.79 billion. This is compared with Infosys' range of $1.77 billion to $1.78 billion.

Assuming a 23 per cent revenue growth rate on Cognizant and a 15 per cent growth rate on Infosys, the former will surpass Infosys in 2012. This will help Cognizant move in to the number two position of the offshore IT services provider, unless Infosys makes an acquisition to boost the top line, says a recent Gartner report.

For the first quarter ended March 2012, Cognizant reported a 17 per cent increase in net profit to $244 million compared with $208 million in the same period last year.

Quarterly revenue rose to $1.71 billion, up 24.8 from the year-ago quarter and up 2.9 per cent sequentially. While revenue for both Infosys and Cognizant is almost equal, the Indian major scores over the American company in better net profit. This is because, Infosys spends more on maintaining its margins while Cognizant spends more on sales and marketing, said an industry source.

Share Repurchase Programme

Cognizant announced that its board of directors has authorised the expansion of its existing share repurchase programme by $400 million, bringing the total authorisation under the current programme to $1 billion. To date, $423 million of shares have been repurchased under this programme. In addition, its board has extended the expiration date for the repurchase programme to December 31, 2013.

> raja@thehindu.co.in

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