A trio of technology companies reported earnings and provided a rough sketch of industry conditions. Here's a quick survey of the landscape.
Overall, the results weren't bad--with the exception of Tibco, which turned in a poor quarter. Combined with earnings from the likes of Oracle and Red Hat enterprise technology spending looks good. Let's go around the horn:
Cognos: Outlook on target, business intelligence chugging along.
Cognos reported second quarter earnings of $26.5 billion, or 31 cents a share, on revenue of $252.4 million. Excluding items, Cognos reported earnings of 40 cents a share. According to Thomson Financial, Wall Street was expecting earnings of 38 cents a share. Cognos CEO Rob Ashe noted that the company saw "solid growth across both our Cognos 8 BI and Financial Performance Management solutions." Looking forward, Cognos projected third quarter revenue in the range of $270 million to $285 million and earnings excluding items of 45 cents a share to 53 cents a share. For the year, Cognos sees revenue in the range of $1.07 billion to $1.1 billion. Earnings excluding items for the fiscal year are projected to be $2 a share to $2.10 a share. Wall Street was expecting earnings per share of 52 cents a share for the third quarter and $2.03 a share for the fiscal year.
Leslie Rechan, Cognos's chief operating officer, had the money quote from the conference call:
"We did have a very orderly close to the quarter and the pipeline is strong, as it relates to greater than $1 million deals. We’ve also got a very good pipeline as it relates to greater than $500K deals going into the third quarter, so I think that there certainly is a demand out there for wider base deployments of these solution sets and customers really looking to deploy the solutions on a wider basis, including implementing things like business intelligence competency centers.
So from a demand point of view, from a customer value point of view, we do see the need for broader base deployments and we feel good about our ability to compete there going forward."
Accenture: Outsourcing pays
Accenture reported fourth quarter revenue of $5.11 billion, up from $3.97 billion a year ago. Earnings for the quarter were 50 cents a share. Wall Street was expecting earnings of 48 cents a share. For the year, Accenture reported revenue growth of 18 percent to $19.7 billion. The company said it was seeing strong demand for its consulting services.
As for the outlook, Accenture is projecting fiscal 2008 earnings to be $2.21 a share to $2.26 a share on revenue growth of 9 percent to 12 percent. Wall Street was expecting earnings of $2.22 a share. Revenue for the first quarter is expected to be $5.4 billion to $5.6 billion. Wall Street was expecting $5.24 billion.
Steve Rohleder, Accenture's chief operating officer, had the money quote on the conference call.
In outsourcing, we are seeing strong demand for our learning and procurement BPO offerings, as well as continued demand for finance and accounting. Application outsourcing continues to be the largest segment of our outsourcing business and we are seeing demand for infrastructure outsourcing bundled with BPO and AO services.
In systems integration and technology, strong demand in SI is being driven by ERP work. Our technology consulting business continues to grow in double-digits, and demand is especially high in data center optimization and workplace collaboration.
We also continue to invest in the expansion of our global delivery network ending the year with more than 71,000 people.
Tibco: One quarter blip or something worse?
Tibco reported third quarter earnings excluding charges of $12.1 billion, or 6 cents a share, on revenue of $135.1 million. Earnings including charges came in at $4.6 million, or 2 cents a share. These results beat Wall Street estimates by a penny. However, Tibco had issued a profit warning and blamed demand in the financial services sector.
What's notable about Tibco is that management said it was company execution--not financial services--was the real reason for the quarter's miscues.
Bear Stearns analyst John DiFucci summed up the situation in a research note.
"Tibco reported results for its August quarter that were slightly better
than the company's disappointing pre-announcement on September 5. However, the results are probably worse than first appears, as cash flow from operations in the quarter declined 60% from a year ago. Management blamed the shortfall on execution (versus macro factors). While we believe this to be accurate, we still believe that the issues facing the financial services vertical could have a meaningful impact on IT spending in the fourth quarter, or more likely in 2008, which raises the risk profile of Tibco given its exposure to this vertical."
In other words, aside from Tibco it's so far so good for technology earnings.