Accenture 3Q Sales Up, May Have Violated U.S. Trade Laws

Accenture on Tuesday reported a slight increase in third-quarter revenue and net income, while admitting that it may have violated U.S. trade and bribery laws.

For the three months ended May 31, the IT and business-consulting firm posted revenue of $3.04 billion, a 0.02% increase over the same period a year ago, when revenue was $2.98 billion. Earnings per share were 28 cents on net income of $132 million, compared to per-share earnings of 27 cents on net income of $114 million a year ago.

During a conference call, chairman and CEO Joe Forehand said that part of an Accenture unit in the Mideast may have been operating in violation of the U.S. Foreign Corrupt Practices Act. He added that Accenture is cooperating with authorities to resolve the matter, Forehand didn't elaborate, and an Accenture spokesman wouldn't identify the business unit or country involved. The spokesman said Accenture is conducting its own internal investigation.

The Foreign Corrupt Practices Act makes it illegal for U.S. citizens or companies to pay bribes to foreign entities in order to obtain overseas contracts. A Justice Department spokesman wouldn't comment on the investigation.

Accenture indicated that its outsourcing business is growing while its consulting business shrinks. Revenue from outsourcing jumped 35% during the quarter to $944 million and now represents 31% of the company's total revenue, up from 23% during the same period a year ago. Consulting revenue fell 8% to $2 billion. Overall, Accenture booked $5.2 billion in new business in its third quarter, an increase of 6% over last year.

Among its business units, Accenture's communications and high-tech operating group produced the most revenue. The unit posted sales of $825 million, a decrease of 7% from a year ago. Accenture's government operating group recorded the lowest sales but was the firm's fastest-growing unit—its revenue increased 28% to $419 million. By region, sales in the Americas were $1.45 billion; in Europe, the Middle East, and Africa, $1.4 billion; and in Asia Pacific, $195 million.