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[sludgehound]

CTSH piece on drop

03:37 PM EDT, 08/06/2014 (MT Newswires) -- Cognizant Technology Solutions (CTSH) shares were down about 12% in the final hour of trade in Wednesday's session despite higher-than-expected adjusted Q2 earnings from the provider of information technology, consulting, and business-process-outsourcing services, as its Q2 revenue missed the Street view and the company cut its sales forecast for the year while projecting Q3 results below analysts' estimates.
CTSH trades in a 52-week range of $35.00 to $54.00.
The company posted net income of $371.9 million, or $0.61 per diluted share, up from $300.4 million, or $0.49 per diluted share, a year earlier. Excluding one-time items, it earned $0.66 per share in the latest quarter, up from $0.58 per share a year earlier and above the $0.62 per share expected on average by analysts polled by Capital IQ.
Revenue climbed 16% to $2.52 billion, slightly below analysts' mean estimate of $2.53 billion.
Citing "weakness at certain clients and longer than anticipated sales cycles for certain large integrated deals," the company said it is "a more conservative stance for the remainder of the year" and thus lowered its revenue guidance to project growth of at least 14% from 2013, versus its prior view for revenue growth of at least 16.5%. Analysts recently were projecting 17% revenue growth to $10.35 billion. The company maintained its forecast for 2014 adjusted EPS of at least $2.54, which matches analysts' latest estimate.
For Q3, the company forecast revenue between $2.55 billion and $2.58 billion and adjusted EPS of at least $0.63. Analysts recently were expecting Q3 revenue of $2.66 billion and adjusted EPS of $0.65.
The company also unveiled three new engagements totaling $3.5 billion in contract value, including a letter of intent with Health Net (HNT), a California-based managed-care organization. The Health Net engagement is a seven-year deal, and following contract finalization and applicable regulatory approval, is expected to represent approximately $2.7 billion in total contract value, the largest in Cognizant's history.
"We expect these three clients to generate at least $200 million in incremental revenue in 2015," said President Gordon Coburn.
In addition, the company said its board approved a $500 million increase in its stock-repurchase program to $2.0 billion and extended its term to Dec. 31, 2015. Since inception of the program, the company has repurchased over $1.1 billion of its shares under the program.
Price: 44.00, Change: -5.98, Percent Change: -11.96
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