Accenture beat 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.
AMD jumped 5.6% on reports of a new chip.
Borland and Silicon Graphics
tumbled on warnings, while Ariba
climbed 2% despite warning.
Blue Coat plunged 17% on news of an SEC trading probe.
