IT stocks fall as Cognizant reduces revenue guidance for 2014

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IT stocks fall as Cognizant reduces revenue guidance for 2014
Tata Consultancy Services: Quotes, News
BSE 2427.85BSE Quote0.85 (0.04%)
NSE 2427.70NSE Quote0.95 (0.04%)
Infosys: Quotes, News
BSE 1029.00BSE Quote9.1 (0.88%)
NSE 1027.10NSE Quote11.2 (1.09%)
Shares in IT stocks fell after IT major Cognizant reduced its revenue guidance for 2014. Infosys was down 1.6 per cent in trade, while TCS dropped 1.31 per cent and HCL tech was down 2.25 per cent.

On Wednesday, Cognizant reported revenue for the second quarter of 2014 rose to $2.52 billion, up 16.5 per cent from $2.16 billion in the second quarter of 2013. GAAP net income was $371.9 million, or $0.61 per diluted share, compared to $300.4 million, or $0.49 per diluted share, in the second quarter of 2013.

Non-GAAP diluted earnings per share was $0.66 compared to $0.58 in the second quarter of 2013. GAAP operating margin for the quarter was 19.4 per cent. Non-GAAP operating margin was 21.0%, higher than the Company's target range of 19-20 per cent. Reconciliations of non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release.

However, the revenue guidance was lowered to 14 per cent from 16.5 per cent for 2014.

"Due to weakness at certain clients and longer than anticipated sales cycles for certain large integrated deals, we are adopting a more conservative stance for the remainder of the year and revising our 2014 revenue guidance to growth of at least 14% over the prior year, while maintaining our full year non-GAAP EPS guidance of $2.54," said Francisco D'Souza, Chief Executive Officer of Cognizant.

"We continue to believe that we have the right strategy and portfolio of services to deliver long-term industry leading growth and also meet the ever changing demands of the market."

Read more about: hcl tech, cognizant, infosys
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