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Syntel's Q3 and full year results hit by arbitration cost

Published: 17:51 17 Oct 2011 BST

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Syntel (NASDAQ:SYNT), a provider of IT and process outsourcing services, said it expects third-quarter sales to rise 19 percent, but also anticipates a one-time charge that is expected to crimp earnings for the full-year.

For the three months that ended September 30, Syntel expects to see revenue of $167 million, up 19 percent from last year and up about 7 percent sequentially.

To reflect third-quarter performance, the company now expects annual sales of $635 to $640 million, raising the low end of its initial forecast. That is up from the original prediction of $625 to $640 million.

However, third quarter results will also include a one-time charge related to an arbitration proceeding with a former client, stemming from a 2004 engagement. Details relating to the arbitration are confidential, the company said.

Syntel estimates this one-time charge will eat into earnings per share by roughly 17 cents for the year 2011.

Syntel said it forecasts adjusted earnings per share to be in the range of $2.65 to $2.73, down from its previous outlook of $2.75 to $2.90 a share.

Analysts, on average, expect Syntel to earn $2.84 a share, on revenues of $635 million, according to Bloomberg.

Syntel plans to carry out a conference call on Thursday, at 10 a.m. to discuss financial and operating performance for the quarter.

The Troy, Michigan-based company’s stock fell $1.34, or 2.71 percent, falling to $48.06 per share Monday afternoon on the Nasdaq.

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