Syntel Profit Tops View, Sales Misses; Stock Down - Update

(RTTNews) - IT services provider Syntel Inc (SYNT), Wednesday reported an increase in third-quarter profit, as revenue climbed 9 percent with other income also making a significant contribution, although somewhat offset by weak margins. Earnings for the quarter topped Wall Street estimates, while revenue missed expectations.

The company cut its revenue guidance for the full year, dragging its shares down 9 percent on the Nasdaq.

"During the third quarter, we experienced some temporary headwinds in our Health Care and Life Science segment that have impacted our full-year 2014 growth outlook," said Syntel CEO Nitin Rakesh.

Syntel, based in Troy, Michigan, posted quarterly net earnings of $61.6 million or $1.47 per share, compared with $59.4 million or $1.42 per share last year.

On average, 13 analysts polled by Thomson Reuters expected earnings of $1.39 per share for the quarter. Analysts' estimates typically exclude one-time items.

Results for the quarter were helped by other income of $10.7 million.

Revenue for the quarter climbed 9 percent to $228.3 million from $209.9 million in the prior year. Analysts expected revenues of $237 million for the quarter

But the revenue growth was offset by gross margin that weakened to 41.4 percent from 46.6 percent a year ago, while operating margin slid to 29.8 percent from 35.9 percent.

For fiscal year 2014, Syntel now expect earnings of $5.60 to $5.70 per share, up from a prior range of $5.50 to $5.65 per share. Revenue is expected between $908 million and $915 million, from a prior range of $920 million to $940 million.

Analysts currently expect earnings of $5.62 per share on revenue of $932 million for the year.

Syntel's earnings-per-share range provided is based on shares outstanding as of September 30 and is before the impact of the 2-for-1 stock split announced on October 8.

Syntel stock is trading at $81.90, down $8.67 or 9.57%, on the Nasdaq.