DETROIT ? While attention was turned to Compuware?s financial performance last week, two other IT services companies, Covansys Corp. and Syntel, both reported solid quarterly results.
Covansys reported net income of $8.6 million, up 31.1 percent from net income of $6.6 million in the third quarter of 2004, but down from $11.2 million in the second quarter of 2005. Second quarter net income included an adjustment of $2.7 million related to tax reserves and valuation allowances. Net income for the nine months ended September 30, 2005 was $27.9 million, compared with net income of $8.3 million during the same period in 2004.
Revenue increased to $111.2 million in the third quarter compared with $96.2 million in the third quarter of 2004, an increase of 15.6 percent. Revenue increased by 2.3 percent over the prior quarter, when Covansys reported revenue of $108.7 million. Revenue for the nine months ended September 30, 2005 was $324.2 million, an increase of 17.8 percent compared with revenue of $275.2 million during the same period in 2004.
Syntel’s net income for the third quarter was $11.7 million or 29 cents per diluted share, down slightly from the $11.9 million or 29 cents per diluted share in the prior-year period, but up sharply from the $9.7 million or 24 cents per diluted share in the second quarter of 2005.
Revenue in Syntel?s third quarter increased 25.5 percent to $58.5 million, compared to $46.6 million in the prior-year period and 7 percent sequentially from $54.7 million in the second quarter of 2005. The Company’s gross margin was 39.7 percent in the third quarter of 2005, compared to 42.0 percent in the prior-year period and 40.1 percent in the second quarter of 2005. Gross margins during the current quarter were impacted by an increase in hiring and investments in Syntel?s services.
