* Sees full-year earnings of at least $3.42/share vs est
* Third-quarter earnings $0.91/share vs est $0.87/share
* Revenue $1.89 bln vs est $1.88 bln
* Shares fall 2 percent
By Sruthi Ramakrishnan
Nov 7 (Reuters) - Strong demand from the financial services
industry and from companies in Europe boosted Cognizant
Technology Solutions Corp's third-quarter results and
prompted the IT services company to raise its full-year earnings
Cognizant, however, said its healthcare division, which
accounts for about 25 percent of total revenue, underperformed
its expectations in the quarter.
Revenue from the healthcare division was slightly lower than
in the second quarter, and Cognizant said it expects growth to
remain flat in the current quarter.
Healthcare has been the growth driver for Cognizant for at
least the last three to four years, Morningstar Inc analyst
Swami Shanmugasundaram told Reuters.
"Now they have to find a different segment to offset that,
because if you look at it, for the first time in many years, I
think, healthcare sequential revenue declined," he said.
The company also said that it expects business from the
pharma industry to remain soft in 2013.
Shares of the Teaneck, New Jersey-based company, most of
whose employees are in India, were down 2 percent at $66.16 on
Wednesday on the Nasdaq.
The U.S.-listed stocks of India-based rivals Wipro Ltd
and Infosys Ltd were also down more than 1
percent. The broader market was down 2 percent.
RISING OUTSOURCING SPENDING
Cognizant said clients, mainly those from North America,
have indicated that overall IT spending would remain flat in
2013, but spending on outsourcing would rise.
"We think there are healthy growth opportunities in Europe
going forward, and the economic downturn has served as a
catalyst for longer-term growth of our business in Europe,"
Cognizant President Gordon Coburn told Reuters.
Cognizant's revenue from Europe grew 4.1 percent in the
quarter. Rival Accenture Plc earlier reported a 4
percent fall in quarterly revenue from Europe, the Middle East
IT services providers such as Cognizant, Accenture, and
India-based Tata Consultancy Services Ltd and Wipro
have benefited from a rise in demand for outsourcing as
companies try to cut costs.
However, Accenture said in September that spending on
consulting would remain slow.
"If I compare (Cognizant's) growth with all the other
players in the market, whether it's TCS or Infosys or Wipro,
Cognizant has been outpacing everybody, sure they still have
that edge," analyst Shanmugasundaram said.
Cognizant has traditionally worked with relatively lower
margins, helping the company win more contracts, while other IT
services companies are coping with slowing business spending in
the United States and Europe.
The company, which was founded in 1994 as a captive unit of
Dun & Brad Street in India, has not missed analysts'
profit estimates for 15 quarters.
STRONG DEMAND FROM BANKS
Third-quarter net profit rose 22 percent to $276.9 million,
or 91 cents per share. Revenue rose 18 percent to $1.89 billion.
Analysts expected earnings of 87 cents per share on revenue
of $1.88 billion.
Revenue from financial services, Cognizant's largest
business, increased 20 percent in the quarter.
Cognizant gets about 40 percent of its revenue from
financial services clients such as JPMorgan Chase & Co,
Rabobank and UBS AG.
"I do have a greater degree of optimism with financial
services than I had say three or four quarters ago," Chief
Executive Francisco D'Souza said on a conference call.
Outsourcing by financial services companies is growing as
banks and insurers try to cut costs to offset low interest rates
and weak demand for loans.
Cognizant said it now expects full-year earnings of at least
$3.42 per share, up from its previous forecast of at least $3.38
per share. It reaffirmed its revenue forecast of $7.34 billion.
Analysts on average expect earnings of $3.39 per share on
revenue of $7.34 billion, according to Thomson Reuters I/B/E/S.