For the most part, it looked like Accenture (NYSE: ACN) was weathering the economic storm. But according to the consulting firm's recent quarterly conference call, things drastically changed from December to January.
Just look at the results: Revenues fell 6.6% to $5.66 billion. However, the major flash point was bookings. That is, total bookings dropped 7.1% to $5.98 billion and consulting bookings were down 17% to $3.14 billion.
No doubt, companies are extremely cautious -- and this means deferring major spending. At the same time, customers are trying to find ways to reduce expenditures on existing contracts. Of course, there were headwinds from auto and financial services customers.
Unfortunately, the weakness is expected to continue. For example, the revenues for the next quarter are expected to range from $5.1 billion to $5.3 billion, which is below the Street consensus of $5.77 billion. And bookings for the full-year are forecasted at $23 billion to $25 billion. Bear in mind that prior guidance was for $24 billion to $27 billion.
True, the fact remains that Accenture has a strong balance sheet, with $2.98 billion in cash. Moreover, as the economy stabilizes, there should be a nice pick up in new contracts. But, in the meantime, performance will probably lag.
So far in today's trading, Accenture's shares are down 13% to $27.7.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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