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* The war in Iran causes business in the Middle East to lose $400 million in the third quarter
* Accenture announces industrial cybersecurity contracts worth $4.18 billion
* Revenue forecast for the fourth quarter is lower than market estimates
(Updated stock market data in paragraphs 1 and 7, added analyst commentary in paragraph 6) by Anhata Rooprai
Accenture ACN.N on Thursday announced quarterly revenue forecasts below Wall Street estimates as the war in Iran hampered its consulting business in the Middle East and beyond, sending its share price down more than 17% and triggering a wave of selling in the sector.
The IT consulting giant suffered a $400 million loss on its Middle East operations due to the conflict in the third quarter and warned that “the impact would be greater in the fourth quarter,†in the latest illustration of how the war has wreaked havoc on businesses. on a global scale.
“The indirect repercussions have really been felt in recent weeks,†said executive director Julie Sweet during a conference call organized after the publication of the results. “It is difficult to know how quickly the situation will evolve, especially as some sectors face longer-term problems.â€
The automotive sector, where Accenture is very present, for example, was already in difficulty before the rise in gasoline prices, a consequence of the conflict, aggravated the pressure, explained Julie Sweet.
In recent months, geopolitical and economic uncertainties have weighed on demand for IT projects, while fears that autonomous AI tools will supplant traditional software services have weighed on valuations across the consulting sector.
“Accenture’s results suggest that demand is increasingly focused on targeted investments in AI, while broader spending on consulting and transformation remains under pressure,†said Phil Fersht, chief analyst at HFS Research. Shares of rivals Infosys INFY.N, Cognizant CTSH.O and IBM IBM.N fell 5.7% to 10.5%, while Capgemini
CAPP.PA closed down 8.9%, with Accenture also lowering its annual revenue forecast.
PRIORITY ON MERGERS-ACQUISITIONS AND INDUSTRIAL CYBERSECURITY
To cushion the shock suffered by its consulting activity, Accenture is relying heavily on industrial cybersecurity. The company announced acquisitions totaling $4.18 billion on Thursday in a combined deal that will expand its $10 billion cybersecurity business.
The group will take a majority stake in industrial cybersecurity company Dragos and acquire the entirety of asset intelligence company runZero as well as device security specialist NetRise.
While cybersecurity budgets remain focused on IT systems, increased internet connectivity and the growing use of AI are making factories, power grids and other critical infrastructure more vulnerable to hackers, drawing attention to tools to protect them.
These transactions, which are expected to be completed in August or September subject to regulatory approvals, will add to Accenture’s offering companies with combined recurring annual revenue of $208 million.
Accenture said it plans to spend $9 billion on acquisitions this year, up from $5 billion, as it moves more toward AI, cloud and data, areas where its clients are focusing spending on large projects related to cost reduction and growth.
The company, headquartered in Dublin, Ireland, said it now expects annual revenue growth of between 3% and 4%, down from its previous forecast of 3% to 5%.
It forecast fourth-quarter revenue of between $17.75 billion and $18.4 billion, below analysts’ average estimate of $18.47 billion, according to data compiled by LSEG.
In the third quarter, the company’s new orders fell about 2% to $19.3 billion. Its revenue rose 6% to $18.72 billion, missing estimates of $18.75 billion.
