US-based IT major Cognizant on Wednesday posted a 1.8 per cent fall in net profit at $416 million for the December quarter, while its board okayed a plan to return $3.4 billion to shareholders over two years. Cognizant, which competes with Indian firms like TCS and Infosys, had posted net profit of $424 million in the year-ago period.
Its revenue stood at $3.46 billion, up 7.1 per cent from the year-ago period. The company recorded out-of-period corrections during the third and fourth quarters ($1 million) of 2016 related to certain payments that impacted the bottomline. During 2016, the company saw its revenue growing 8.6 per cent to $13.49 billion, meeting the company's topline forecast of $13.47-13.53 billion. Its net profit fell 4.3 per cent to $1.55 billion in 2016.
For 2017, Cognizant expects its revenue to be in the range of $14.56-14.84 billion, which translates to 7.9-10 per cent growth. It has given a revenue forecast of $3.51-3.55 billion for the January-March 2017 quarter. Also, Cognizant has entered into a ‘cooperation agreement’ with activist shareholder Elliott Management and appointed three independent directors to its board.
“As we enter 2017, the time is right for us to accelerate the shift to digital services and solutions to meet the growing demands from our clients to transform their business models in the face of the rapid business and technology shifts disrupting their industries,” Cognizant Chief Executive Officer Francisco D’Souza said. To meet this opportunity, Cognizant is evolving its business model to focus on aggressively scaling its digital capabilities, driving efficiencies in core business and launching a robust capital return programme, he added.