Shares in offshore outsourcing provider Cognizant Technology Solutions slumped 17% after the company’s forecast for fourth-quarter sales fell below analyst’s expectations.
Teaneck, New Jersey-based Cognizant expects revenue for the three months to the end of December to be between $590m and $595m, compared to the analyst consensus of $598m. In early trading on Nasdaq, shares fell over $6.50 to just under $33, a 52-week low for Cognizant.
Cognizant derives approximately 50% of its revenue from financial services, and the concern is that the company’s revenue stream is beginning to feel the effects of the US credit squeeze. Yesterday, French systems integrator Sopra Group laid the blame for the downturn in its US performance squarely on the banking crisis.
For the third quarter of 2007, Cognizant reported net profit of $96.2m, up from $61.0m in the same period of the previous year, on revenue that grew 48% to $558.8m. Both revenue and earnings came in above analyst expectations, and the company raised its full-year sales guidance for the third consecutive quarter to $2.13bn.
Cognizant continues to grow its European business, which now accounts for 17% of total sales. Quarterly revenue for the region was up 90% on the previous year and 24% on a sequential basis. Cognizant’s major European customers include Rabobank, France Telecom, and Marks and Spencer.