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Accenture Enters Marketing Services with Acquisition

Posted on Tuesday, Dec 25th 2012

According to IDC’s Business Process Outsourcing (BPO) market forecast, the worldwide BPO market is projected to grow 5.3% annually over the period 2011-2016 to $202.6 billion. IDC expects the U.S. market to grow annually at 4.2% during the period to reach $92 billion in 2016. The BPO market is driving growth in the performance of global leader Accenture’s (Nasdaq:ACN) performance as well.

Accenture’s Financials
Accenture’s Q1 revenues grew 2% over the year to $7.22 billion, missing the market’s projected revenues of $7.3 billion. EPS of $1.06 was a penny higher than the previous year’s $0.96 and the market’s projected $1.05.

By segment, consulting revenues fell 3% to $3.96 billion, making this quarter Accenture’s third consecutive quarter of declining consulting revenues. Accenture attributed the decline to the continuing economic pressures which resulted in slow decision making and weaker spending on big consulting projects by prospective clients. The outsourcing segment continued to report strong growth and for the quarter reported an increase of 9% to $3.26 billion.

Accenture ended the quarter with 259,000 employees worldwide. Utilization rates rose from 87% a year ago to 88% and attrition, which excludes involuntary terminations, fell from 12% a year ago to 11%. The company expects to hire at least 50,000 people during the current fiscal year.

For the current quarter, Accenture projects revenues of $6.9 billion-$7.15 billion, compared with the Street’s target of $7.17 billion. Accenture expects to end the year with EPS of $4.24-$4.32 compared with the Street’s target of $4.27.

Accenture’s Acquisitions
As part of its acquisition spree, Acccenture recently acquired avVenta Worldwide, a provider of digital production services. avVenta’s solutions help customers with end-to-end marketing efforts, including assistance in developing strategies to manage marketing systems and campaigns. avVenta’s customer list includes more than 130 Fortune 500 companies in industries spanning the pharmaceutical, financial services, consumer packaged goods, retail, energy, technology and travel fields. It employs more than 600 people in its headquarters in New York and its digital production fulfillment centers in San Jose, Costa Rica, and Charleston, S.C. Accenture plans to integrate avVenta’s digital production and design processes with their Interactive’s marketing operations, technology, and analytics services to offer marketing teams the ability to deliver improved return on marketing investments.

Accenture’s Global Expansion
Accenture remains committed to expanding their operations worldwide and is seeing good traction in the performance of its emerging markets segments. Earlier last month, it opened a new Accenture Innovation Center in China. Through this center and the company’s existing technology lab in the country, Accenture plans to deliver better client engagement and innovation. Within the Americas, Brazil is a high-growth market that saw 10% revenue growth during the quarter.

The stock is trading at $66.94 with a market capitalization of $45.77 billion. It touched a 52-week high of $71.79 in October 2012.

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