Accenture second-quarter forecast disappoints as IT spending weakens

Accenture Plc’s second-quarter forecast disappointed investors as the outsourcing and consulting company’s clients deferred discretionary spending in Europe, sending its shares down 5 percent in after-market trade.

Accenture forecast second-quarter revenue of between $6.9 billion and $7.15 billion. Analysts on average had estimated $7.14 billion.

During the just-concluded first quarter, revenue from Europe, Middle East and Africa (EMEA) fell 6 percent to $2.82 billion, the company said. EMEA accounted for nearly 41 percent of Accenture’s revenue last fiscal.

Overall revenue inched up 2 percent to $7.22 billion, but was short of analysts’ average estimate of $7.29 billion.

“The root cause of the revenue weakness is clients showing a slow spending pace on small and mid-sized consulting deals,” Sanford Bernstein analyst Rod Bourgeois said.

Revenue from the company’s communications, media and technology business fell 5 percent to $1.46 billion. The decline was most pronounced in the EMEA region where clients continued to defer investments, Chief Financial Officer Pamela Craig said on a conference call with analysts.

Consulting revenue fell 3 percent to $3.96 billion during the quarter ended November.

However, outsourcing revenue rose 9 percent to $3.26 billion during the first quarter.

Net income rose to $766 million, or $1.06 per share, from $712 million, or 96 cents per share, a year earlier. Analysts were looking for $1.04 per share, according to Thomson Reuters I/B/E/S.

The company’s shares were down 4 percent at $67.65 in after-market trading on Wednesday.