Accenture reports earnings; Trefis priced increased from $46.63 to $50.24 (33%+ upside to market price)

Yesterday, Accenture reported earnings that were in line with expectations.  We’ve updated the Trefis price to $50.24 to reflect the changes in Accenture’s business.

Key Takeaways

• Reported quarterly revenue of $5.15 billion beats consensus of $5.14
• Reported quarterly diluted EPS of $0.63 was in line with consensus
• Better than expected overall employee utilization (86%) reported
• The year-over-year quarterly revenue decline was attributable to reduced pricing (consultant bill rates) and fewer consultants (headcount)
• Recovery of consultant bill rates and headcount over the Trefis forecast period will be the key drivers of the Trefis price.  Click on one of the forecasts below to see the impact of bill rates, headcount or utilization on the Trefis price

Updates to Trefis Analysis

1. • Lowered 2009 Professional Bill Rate per Hour (AO) (Negative Impact)
   • Lowered 2009 AO Services Professional Headcount (Negative Impact)

   • Lowered 2009 Professional Bill Rate per Hour (BPO) (Negative Impact)
   • Lowered 2009 BPO Headcount (Negative Impact)

   • Lowered 2009 Consultant Bill Rate per Hour (Negative Impact)
   • Lowered 2009 Consultant Headcount (Negative Impact)
   • Increased 2009 Consultant Utilization (Positive Impact)

   • Lowered 2009 Consultant Bill Rate per Hour (Negative Impact)
   • Lowered 2009 Technology Consultant Headcount (Negative Impact)
   • Increased 2009 Technology Consultant Utilization (Positive Impact)

   • Lowered 2009 Professional Bill Rate per Hour (Negative Impact)
   • Lowered 2009 Systems Integration Headcount (Negative Impact)
   • Increased 2009 Systems Integration Utilization (Positive Impact)

2. Cash Minus Debt increased from by approximately $1.5 billion (Positive Impact)
3. Shares Outstanding decreased from 790 million to 731 million (Positive Impact)
4. Technology Outsourcing (within Outsourcing division)
5. Business Process Outsourcing (within Outsourcing division)
6. Management Consulting
7. Technology Consulting
8. Systems Integration

Outlook and Guidance

Accenture management has been hearing greater optimism about the future from its customers although clients remain cautious about taking on new consulting or outsourcing projects.  Given the uncertain business environment, customers continue to prefer smaller, immediate-ROI engagements.

The competitive landscape for Accenture changed during September when Dell announced its acquisition of Perot Systems and Xerox announced its acquisition of ACS.  Accenture CEO Bill Green expressed delight regarding these changes and sees this as an opportunity for Accenture to move forward while its new competitors (Dell, Xerox) face the challenges of integration.

Accenture expects revenues of $5.3 to $5.5 billion for the quarter ended November 30, 2009.  Based on the Trefis analysis, our implied revenue for that quarter is $5.3 billion.