Cognizant expects to clock 17% growth in 2013

If it achieves that target, Cognizant can potentially establish a huge lead over Infosys while narrowing the gap with India's largest IT services exporter, TCS.

twitter-logo Goutam Das        Last Updated: February 7, 2013  | 22:17 IST

Cognizant met analyst expectations for its fourth quarter, which ended in December 2012. The information technology (IT) services company's revenue grew three per cent over the previous quarter to $1.95 billion. Sequentially, its revenue growth was lower than closest rival Infosys' 6.3 per cent jump during the same period. But in absolute revenue terms, Cognizant maintained a slender quarterly lead over Infosys, which reported a topline of $1.91 billion.

However, the real number to ponder over in Cognizant's results is its guidance. The company expects to clock 17 per cent growth in calendar year 2013 and record annual revenues of $8.60 billion. If it achieves that target, Cognizant can potentially establish a huge lead over Infosys while narrowing the gap with India's largest IT services exporter, TCS. For the year ending March 2014, analysts see Infosys's full-year revenues at $8.20 billion.

A 17 per cent topline jump for Cognizant would be commendable anyway, given the macroeconomic uncertainty in its primary revenue geography, the United States. The guidance also indicates that global corporations will continue to spend big dollars on IT services and outsourcing. All eyes will now be on Infosys's guidance for the year ending March 2014, to be announced in April.

Read: Is Infosys missing Narayana Murthy?

Cognizant's revenues increased 20 per cent in 2012 to $7.35 billion. The company reported a net income of $278.8 million or $0.92 a share, compared to $240.1 million or $0.78 a share in the year-ago period.

At the end of 2012, it had a headcount of 156,700, higher than Infosys' 155,629 employees.

"Generating broad-based, industry leading growth of 20 per cent within the tough demand environment of 2012 is a testament to the strength of our business model," noted Chief Financial Officer Karen McLoughlin in a statement. "Furthermore, 2012 was a strong year of cash generation. Our cash and short-term investments grew by $430 million during the year, after covering over $480 million of share repurchases," she added.

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