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Accenture expects consulting business to pick up

Visitors look at devices at Accenture stand at the Mobile World Congress in Barcelona, February 26, 2013. REUTERS/Albert Gea
Visitors look at devices at Accenture stand at the Mobile World Congress in Barcelona, February 26, 2013. REUTERS/Albert Gea

(Reuters) - Accenture Plc said it expected its consulting business to turn the corner this financial year as orders rise, building on strength in its outsourcing unit that helped the company report better-than-expected quarterly results.

Accenture shares rose as much as 5 percent on Thursday.

"We think consulting could be flat to low single-digit positive (in the second quarter) ... we see the potential for building momentum in consulting as we go through the year," Chief Financial Officer David Rowland said on a conference call.

Consulting bookings rose to $4.3 billion in the first quarter from $4.2 billion a year earlier.

Accenture's consulting business has been hit in the past few quarters as companies cut down on discretionary spending. Revenue from the business has declined in five of the last six quarters.

The company did report a rise in revenue from the business in the fourth quarter but said it was too early to say if that was sustainable.

Revenue from the consulting business fell 1 percent to $3.94 billion in the quarter ended November 30.

Rival IBM said in October that revenue from its services business, which consists of consulting and application management, was flat in the third quarter.

Accenture's outsourcing business has benefited, particularly in Europe, as companies cut costs amid patchy economic recovery.

Revenue from the business increased 5 percent to $3.42 billion in the first quarter.

Outsourcing accounted for 51 percent of total bookings in the quarter, up from 44 percent a year earlier.

"They've set the stage well for their fiscal 2014. Now they need to execute," Edward Jones analyst Josh Olson said.

MIXED FORECAST

Accenture forecast current-quarter revenue below estimates. The company said it expected second-quarter revenue of $6.95 billion to $7.25 billion, below the average analyst estimate of $7.28 billion, according to Thomson Reuters I/B/E/S.

However, the company raised its earnings forecast range for the year ending August 31 by 2 cents to $4.44-$4.56 per share, saying it expects less impact from foreign exchange rates than previously estimated.

Accenture said it expected at least 60,000 new employees in the fiscal year. The company had about 275,000 employees as of August 31.

Net income rose to $811.6 million, or $1.15 per share, in the first quarter from $766 million, or $1.06 per share, a year earlier.

Revenue rose 2 percent to $7.36 billion.

Analysts on average had expected earnings of $1.09 per share on revenue of $7.25 billion.

Accenture shares were up 4.4 percent at $78.95 in afternoon trading on the New York Stock Exchange.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila)

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