Excerpts from analysis of Accenture's 1Q FY07 business results (Dec 31, 2006)

Annex Bulletin 2006-45 December 21, 2006

Excerpts from CONFIDENTIAL client edition

IT SERVICES

Updated 12/21/06, 7:30AM PDT

Analysis of Accenture's First Quarter FY07 Results

"Excellenture" Excels Again

Accenture Is on a Tear, Smashing New Records in Many Business Categories; Revenues Up 14%, Profit Up 32%

SCOTTSDALE, Dec 21 - The company we dubbed "Excellenture" a year ago, has exceeded its own excellence again. First quarter revenues of its fiscal 2007 surged 14% to a new quarterly record of $4.75 billion. Net profit is up 32% to $284 million. Earnings per share are up 28%. Operating income is up 19%. Operating margin is up. New bookings tied the previous first quarter record (from a year ago). The company set record revenues across all geographies and its five operating groups. And so on...

In other words, Accenture is on a tear. And now, writers and analysts are running out of unused superlatives. Here's, for example, what we said about the company's first quarter of FY06:

HONOLULU, Hawaii, Jan 5 (2006) - "It doesn't get much better than this," we said about Accenture's last report card (see "A Whopper Quarter," Oct 2006). And then it just did. Accenture outdid itself again after the markets closed today (Jan 5, 2006). Maybe the company should rename itself Excellenture? J

(An excerpt from "Accenture Excels Again," Jan 2006)

[snip]

Business Segment Results

Geographies. All Accenture business segments in all geographies and horizontal activities grew in the latest quarter. Europe made the most spectacular recovery, going from a decline in the previous quarter (mostly due to the termination of the British NHS project), to a double digit (+15% to $2.3 billion) surge in the last three months (see the chart on the right).

[snip]

Industries. The financial services sector was again the best among Accenture's five industry units, surging by 25% to $1.1 billion. Products and resources also grew in double digits (+up 7% each, to $1.2 billion and $763 million respectively - see the chart).

[snip]

Horizonal. Both of the company's two horizontal activities - consulting and outsourcing - grew in double digits. Consulting revenues were $2.9 billion, up 13%, while outsourcing business surged 16% to $1.8 billion.

[snip]

New Bookings. Accenture's new bookings in the first quarter showed the reverse pattern. The company did better in consulting than in outsourcing. Which bodes well for balanced future growth.

[snip]

Outlook

Looking ahead, Accenture executives said they expect net sales for the second quarter to be between $4.6 billion and $4.8 billion, above Wall Street estimates of $4.5 billion.

[snip]

"That's all she wrote," we're afraid, for those of you who are NOT Annex Research clients, who are now reading the complete Annex Newsflash, along with all charts which back up our story.

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Volume XXII, Annex Newsflash 2006-45
December 21, 2006

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