Accenturebeat Wall Street estimates and raised guidance late Thursday, but the stock tumbled 5% in Friday trading on worries about falling profit margins.
Accenture’s earnings of 35 cents a share on revenues of $3.81 billion beat analyst estimates, and the company raised June quarter guidance to 48-50 cents a share on revenues of $4-4.2 billion.
But with gross margins falling to 30.8 percent from 33 percent in the year-ago quarter on cost overruns and deployment delays, Morgan Stanley downgraded the stock, citing “deteriorating earnings quality; large, new underperforming contracts; and a lack of operating leverage that could persist for the next year.”
Wachovia added that Accenture “is carrying significantly higher than estimated unbilled services” for two 10-year contracts totaling $3.3 billion with Britain’s National Health Service.
The broader market also tumbled on Friday, as earnings worries returned to the fore on warnings from the likes of Trex, Labranche, USF Corp.and Yellow Roadway.
The Nasdaq fell 19 to 1999, the S&P 500 lost 9 to 1181, and the Dow tumbled 84 to 10,461. Volume declined to 1.66 billion shares on the NYSE, and 1.52 billion on the Nasdaq. Decliners led 23-9 on the NYSE, and 20-9 on the Nasdaq. Downside volume was 77% on the NYSE, and 74% on the Nasdaq. New highs-new lows were 62-40 on the NYSE, and 36-71 on the Nasdaq.
AMDjumped 5.6% on reports of a new chip.
Borlandand Silicon Graphicstumbled on warnings, while Aribaclimbed 2% despite warning.
Blue Coatplunged 17% on news of an SEC trading probe.