) declared its financial results for the second quarter of fiscal
2012, beating the Zacks Consensus Estimates. However, Amdocs has
reduced its previous revenue forecast for the rest of fiscal 2012.
The major concern for Amdocs is the continuation of its business
) after the latter's failed merger attempt with T-Mobile USA.
AT&T is the largest customer of Amdcos. In the last couple of
quarters, Amdocs' business with AT&T was sluggish due to the
cancellation of the proposed merger.
Initiation of Dividend
The Board of Directors of Amdocs has approved the initiation of
a quarterly cash dividend program of $0.13 per share. The company
will hold a special shareholders meeting on July 31, 2012 to
approve the dividend. Shareholders' approval will enable the
company to pay its first dividend in the first quarter of fiscal
Second Quarter Results in Details
Quarterly net income, on a GAAP basis, was $101.9 million or 60
cents per share compared with a net income of $94.1 million or 50
cents per share in the prior-year quarter. Adjusted (excluding
special items) EPS stood at 62 cents in the reported quarter,
outpacing the Zacks Consensus Estimate of 59 cents. Quarterly total
revenue of approximately $809 million inched up 2.5% year over
year, exactly in line with the Zacks Consensus Estimate.
Quarterly gross margin was 35.9% compared with 34.9% in the
year-ago quarter. Reported operating income was approximately
$109.9 million, up 3.1% year over year. Operating margin was 13.6%
versus 13.5% in the prior-year quarter. At the end of the second
quarter of fiscal 2012, total order backlog was $2,725 million
compared with $2,690 million at the end of the previous quarter. In
the reported quarter, Amdocs repurchased shares worth $117
During the first half of fiscal 2012, Amdocs generated around
$224.5 million in cash from operations compared with $237.9 million
in the prior-year period. Free cash flow (cash flow from operations
less capital expenditure) in the first half of 2012 was $174.3
million compared with $182.4 million in the prior-year period.
At the end of the second quarter of fiscal 2012, Amdocs had
approximately $895.6 million in cash and marketable securities and
no outstanding debt on its balance sheet compared with $1,173.5
million of cash and marketable securities and $250 million of
outstanding debt at the end of fiscal 2011.
Segment Wise Results
Service revenue was $782.7 million, up 3% year over year.
License revenue was approximately $26.2 million, down 8.6% year
over year. Technologically, Customer Experience Systems revenue was
$758.9 million, up 2.9% year over year. Directory revenue was $50
million, down 3.3% year over year. The company's core Managed
Services revenue was $414.4 million, up 8.3% year over year.
Geographically, North America generated $563.2 million, down
5.9% year over year; Europe generated $111.8 million, up 15% year
over year; while the Rest of the World contributed the remaining
$133.9 million, up 43.5% year over year. Revenue from the emerging
markets came in at $89.4 million, up 71.6% year over year.
Future Financial Outlook
Management expects third quarter of fiscal 2012 revenue to be in
the range of $805 million - $825 million. EPS, on a GAAP basis, is
expected between 52 cents - 60 cents. Non-GAAP EPS, including 5
cents - 6 cents per share of equity-based compensation expense, is
projected in the range of 59 cents - 64 cents.
For fiscal 2012, Amdocs expects its total revenue to grow by
approximately 2.5% -3.5% year over year and its non-GAAP EPS to
increase by at least 12% -14% year over year.
We maintain our long-term Neutral recommendation onAmdocs.
Currently, Amdocshas a Zacks#3 Rank, implying a short-term Hold
rating on the stock.
AMDOCS LTD (
): Free Stock Analysis Report
AT&T INC (
): Free Stock Analysis Report
To read this article on Zacks.com click here.