(Corrects last paragraph to say Cognizant is one of the top
applicants for green cards in the United States, not India)
* First-quarter profit $0.93/share, in line with estimate
* First-quarter revenue $2.02 bln vs estimate of $2.01 bln
* Sees second-quarter revenue at least $2.13 bln vs est
* Shares up as much as 6 pct
May 8 (Reuters) - Cognizant Technology Solutions Corp
forecast current-quarter revenue above market
expectations after an 18 percent rise in the first quarter,
helped by strong demand from Europe.
The IT service provider is also benefiting from an increase
in demand from its global banking customers, who have stepped up
spending to comply with stricter regulations.
"We are now three quarters into pretty good growth in the
banking sector, and we expect to continue to see that growth
throughout the year," Chief Financial Officer Karen McLoughlin
Financial services contributed 40 percent to the company's
sales in 2012, with more than half of that coming from the
Cognizant shares rose 6 percent but eased a little to trade
up 4.5 percent at $67.80.
First-quarter sales from Europe rose 23 percent, outpacing a
16 percent growth in North America. Europe accounts for nearly a
fifth of Cognizant's revenue.
Instability in Europe has forced companies in the region to
outsource and cut costs. But Cognizant, which operates on lower
margins than its rivals, has been able to win a larger share of
Chief Financial Officer Karen McLoughlin said the company
continued to be "really bullish on long-term opportunities" in
"As we look across our business, while there continues to be
pockets of weakness, we are encouraged that the majority of our
businesses are experiencing positive demand and growth
characteristics," Chief Executive Francisco D'Souza said on a
conference call with analysts.
Analysts said the company's focus on the financial services
and health care businesses allows it to differentiate itself
from other in the industry.
Indian rivals such as Tata Consultancy Services,
Infosys Ltd and Wipro Ltd reported mixed
results for the first quarter, highlighting a shaky recovery in
Cognizant, which was founded in 1994 as a captive unit of
Dun & Brad Street in India, forecast revenue of at least
$2.13 billion for the second quarter.
Analysts on average were expecting revenue of $2.11 billion,
according to Thomson Reuters I/B/E/S.
Cognizant forecast earnings of 97 cents per share, in line
with analysts' estimates.
First-quarter net income rose 18 percent to $284.2 million,
or 93 cents per share. Revenue rose to $2.02 billion from $1.71
Analysts on average had expected earnings of 93 cents per
share on revenue of $2.01 billion.
Shares of IT services companies took a hit last month on
news that the U.S. Senate Judiciary Committee was debating a
draft immigration bill that could hurt Indian outsourcing firms'
businesses in the United States. (http://link.reuters.com/fug67t)
The proposals, which include a sharp cut in the number of
foreign workers who can be sent to the United States by
companies such as Infosys and TCS, have won support from rival
U.S. firms including IBM and Accenture.
"Although the recently introduced bill includes some
important fixes to the green card process, there are also some
clauses that would be detrimental to Cognizant," President
Gordon Coburn said on a conference call with analysts.
"These clauses include higher fees on visas, a requirement
to pay above market salaries to visa holders, potential
restrictions on access to visas, and constraints on the ability
to have visa holders serve our clients."
Cognizant is one of the top applicants for green cards in
the United States and analysts have estimated that about 65
percent of Cognizant's employees in the United States work on
H-1B or L-1 visas, or work permits.
(Reporting by Sayantani Ghosh and Sruthi Ramakrishnan in
Bangalore; Editing by Supriya Kurane and Joyjeet Das)